We have put together a table of the best £20,000 loan rates in the UK to make finding the best deal less challenging. The figures in the table on this page are based on the representative example of repaying a £20,000 loan over 5 years. This means that some applicants may be offered a different loan amount or rate depending on their credit history, financial circumstances and the period they want to repay the money over. You can use this page to find the best £20,000 loan deal and all the information you need to know about taking out a loan.
What is the best loan for £20,000?
Comparing a number of different loan deals is the best way to find the right personal loan for you. You can use the representative APR figure as an indication of which provider offers the cheapest deal, though it will not necessarily be the rate you get. Read our article ‘What is representative APR?’ for more information.
The advantage of comparing a range of lenders is that you can get a broad idea of what is available. For example, a lender could offer the best interest rate, but not the term length you need. An alternative option could have the perfect term length available, but not the full £20,000. Doing a comparison should mean you find a deal that covers as many bases as possible.
You will see in the table that some lenders offer an eligibility checker that you can use to see how likely you are to be successful before you apply. This can help you limit how many rejections appear on your credit file. This is useful because too many credit applications in a short period can suggest that you are not managing your finances well and make it harder to get credit in the future.
We have more information on the basics of a loan in our article ‘What is an unsecured loan?’.
The best rates on a £20,000 loan – December 2023
|Loan provider||Representative APR (five-year term)||Available loan term||Available loan amount||Eligibility checker?||Monthly payment|
|AIB (NI)¹||5.6%||1 - 5 years||£1,000 - £25,000||No||£382.80|
|Tesco Bank||6.0%²||1 - 10 years||£1,000 - £35,000||Yes||£385.18|
|Sainsbury’s Bank||6.3%³||1 - 7 years||£1,000 - £40,000||No||£387.82|
|Santander||6.4%||1 - 5 years||£1,000 - £25,000||No||£388.70|
|Halifax||6.6%||1 - 7 years||£1,000 - £50,000||Yes||£390.47|
|Lloyds||6.7%||1 - 7 years||£1,000 - £50,000||Yes (but you will need to be registered for online banking with Lloyds)||£391.35|
|M&S Bank||6.9%||1 - 7 years||£1,000 - £25,000||Yes||£390.47|
|TSB||6.9%||1 - 7 years||£300 - £50,000||No||£393.11|
|HSBC||7.9%||1 - 5 years||£1,000 - £25,000||No||£397.54|
|Zopa||22.9%||1 - 5 years||£1,000 - £25,000||Yes||£538.80|
Representative APR is based on a 5-year loan term
¹You must be an existing personal current account customer with AIB (NI) and registered for Online Services
²Clubcard members receive a preferential rate, non-members will get from 6.4%
³Nectar members receive a preferential rate, non-members will get from 6.7%
How a £20,000 loan works
A £20,000 personal loan works like most other forms of borrowing – once you are approved, the lender will transfer you the money and you will need to start repaying what you owe. The repayments will usually be in equal monthly instalments over a pre-agreed period of time and include interest charges. You should have been informed what each monthly payment will during the application process. You may be able to pay more than the agreed amount to clear your debt more quickly, but some lenders will charge a fee. The loan fees you are expected to pay should be made clear by the lender.
A £20,000 personal loan is a form of unsecured borrowing, which means you will not need to use a valuable asset – such as your home – as security. If you want to learn more about the differences between secured and unsecured loans, read our article ‘Secured vs unsecured loans: Which is best for me?’.
An application for a £20k loan can be completed online, over the phone or at a high-street bank branch. You will usually need proof that you are a UK resident and over the age of 18.
Can I get a £20,000 loan with no credit check?
Your lender will always conduct a credit check and an affordability check. This is because it will need to be satisfied that you are both a trustworthy borrower and you can afford the monthly repayments. If the lender decides that there is too great a risk of your repayments not being paid on time – either because you do not have enough money coming in or you have a history of missed payments – your application will be rejected.
The best way to avoid rejections is to keep track of your credit score and check your eligibility online before you apply. Find out how to check your score by reading our article ‘The best way to check your credit score for free’ and see what you can do to improve it by reading ‘How to improve your credit score quickly’.
You can get a loan with a low credit score, but the loan amount, rate of interest and term may not be what you wanted. Overall, a bad credit loan is likely to be more expensive than a standard loan. You can read our article ‘How can I get a loan with poor credit?’ to learn more.
The key figures in a £20,000 loan
These are the important figures to focus on when you compare £20k loans:
- Loan amount - Whether or not you can borrow the full £20,000 will depend on the affordability criteria of the lender, your own financial circumstances and your borrowing history. With some providers, you may be able to borrow as much as £50,000 or more.
- Loan term - Some lenders will offer longer terms and others will limit the term depending on the amount borrowed. Seven years is one of the most common upper limits.
- Loan fees - Fees will vary significantly from lender to lender, and can apply to early repayments, late repayments and setting up the loan.
- APR (annual percentage rate) - This is the annual rate of interest, including standard fees and interest. You can use it to help you work out the total cost of borrowing the money in the first year.
- Representative APR (annual percentage rate) - This is the rate that a lender expects to offer at least 51% of successful applicants. You may get a higher or lower figure, but it can be a good way to compare providers.
- Early repayment charge - This is the percentage figure that a lender may charge if you decide to clear your debt before the end of the loan term. The rules are slightly different if you took out a loan prior to February 2011, but there should be no charge for paying off up to £8,000. For loans over £8,000, lenders can charge up to 1% of the amount that was repaid early, or 0.5% if you are in the final year of the repayment period.
You should also think about your credit score. A low score may mean your application is rejected, while a high score makes it more likely you will be offered the lender’s top rates.
How much will a £20,000 loan cost per month?
A £20,000 loan repaid over five years at a rate of 6.0% APR will mean a monthly repayment of £385.17 a month, costing £23,110.80 in total. A longer loan term will reduce the monthly payments, but it will make the overall cost greater. This is because there will be more months for the debt to grow with interest. Cutting the loan term will leave you paying less interest, but each monthly payment will go up. Make sure you can afford to pay the monthly repayments in full and on time.
What can I use a £20,000 loan for?
A lender will usually ask how you plan to spend the £20,000 during the loan application process. Common reasons to get a personal loan include paying for:
- A wedding
- A car
- A holiday
- Home improvements
- Debt consolidation
What can't I use a £20,000 loan for?
There are a few important spending restrictions on a personal loan. Most lenders will reject an application if the applicant plans to use the money for:
- Illegal activity
- Buying shares
- A deposit for a property
Some lenders will also reject applicants borrowing for business purposes. You can find out more about specialist business loans in our article ‘What is a business loan?’.
Pros and cons of a £20,000 loan
Take a look at these advantages and disadvantages of a personal loan to work out if it is the right option for you.
Pros of a £20,000 loan
- Spread the cost of a purchase
- Lower long-term interest rate than most credit cards
- Stability of fixed monthly repayments
- Less risk to your assets than borrowing with a secured loan
- Widely available
- Can be repaid early in most cases (though sometimes for a cost)
- Applications can be approved and money paid out relatively quickly
Cons of a £20,000 loan
- No interest-free period
- Can be difficult to borrow a small sum from a major lender
- A missed repayment or failed application can damage your credit score
- Hard to get the best interest rate with bad credit
Alternatives to a £20,000 loan
There are a lot of ways to borrow money and spread the cost of expenses, so make sure to consider all of the alternatives to a £20,000 loan. Even the top £20k loan may not be the right option for you. Here are the alternatives you could consider:
- Secured loan - This is secured against your home, car or another valuable asset, which could be sold if you cannot repay your debt. However, you may be able to access much higher loan amounts and lower interest rates compared to an unsecured loan. We have more information in our article ‘What is a secured loan?’ and the best deals on our 'The best secured loans' page.
- Credit card - A credit card is a much more flexible way of borrowing money compared to taking out a loan, but many people will be unable to get a credit limit as high as £20,000. You can check out the details of the best cards in our article ‘Best credit cards in the UK’.
- Remortgaging - This is a common borrowing option for homeowners looking to raise cash for home improvements. It involves increasing what you owe on your current mortgage rather than taking out a new loan product. We have more details in our article ‘Remortgage to release equity from your home’.
- Car finance - A £20k loan to pay for a new car may not be as good an option as specialist car finance. We explore each option in our article ‘Buying a car: what are the best finance options?’.