Compare deals on a £25,000 loan

7 min Read Published: 02 May 2024

Compare deals on a £25,000 loanYou can use this article to compare the best £25,000 loans in the UK. You can also learn all of the key information on how personal loans work and what alternative options are available. Four our table below, we have used the representative example of repaying a £25,000 loan over five years. This means that the rate you see may not be the one you get. You could be offered a lower loan amount or a different rate once the lender has considered your credit history and your financial circumstances. How long you plan to take to repay the money is also important. Use the table below to work out which £25,000 loan would best suit you and read the rest of the page to make sure you understand how the loan will work.

The best rates on a £25,000 loan – May 2024

Loan provider Representative APR (five-year term) Available loan term Available loan amount Eligibility checker? Monthly payment
TSB 5.9% 1 - 7 years £300 - £50,000 No £480.38
Tesco Bank 6.1%¹ 1 - 10 years £1,000 - £35,000 Yes £482.57
Sainsbury’s Bank 6.1%² 1 - 7 years £1,000 - £40,000 No £482.57
Santander 6.3% 1 - 5 years £1,000 - £25,000 No £484.78
Halifax 6.6% 1 - 7 years £1,000 - £50,000 Yes £488.08
Lloyds 6.7% 1 - 7 years £1,000 - £50,000 Yes (but you will need to be registered for online banking with Lloyds) £489.18
M&S Bank 6.9% 1 - 7 years £1,000 - £25,000 Yes £491.40
AIB (NI)³ 7.1% 1 - 5 years £1,000 - £25,000 No £494.61
HSBC 7.9% 1 - 5 years £1,000 - £25,000 No £502.47
Zopa 22.9% 1 - 5 years £1,000 - £25,000 Yes £673.50

Representative APR is based on a 5-year loan term

¹Clubcard members receive a preferential rate, non-members will get from 6.5% with monthly payments from £486.97

²Nectar members receive a preferential rate, non-members will get from 6.4% with monthly payments from £485.88

³You must be an existing personal current account customer with AIB (NI) and registered for Online Services

What is the best loan for £25,000?

Compare as many different loan deals as you can in order to find the best personal loan for you. You may find that one lender offers the top interest rate, but not the term length you want. Another could have the term length, but not the full £25,000. A comparison should help you find a deal that ticks multiple boxes.

The representative APR is the most useful number when it comes to finding the cheapest £25,000 loan, but it will not necessarily be the figure you are offered. We explain why in our article ‘What is representative APR?’.

You can use an online eligibility checker – which some providers offer – to see how likely you are to be successful. Checking before you apply will limit the number of rejections on your credit file and make it easier to get credit in the future.

If you need more information on the basics of a loan, check out our article ‘What is an unsecured loan?’.

How a £25,000 loan works

You can choose to apply for your £25,000 loan online, over the phone or in person. You will need to prove that you are both a UK resident and over the age of 18.

Once your application is approved, you will need to start paying the money back. This will be through equal monthly instalments over the course of the loan term. Each repayment will partly pay back some of the money you have borrowed and partly cover the interest on the debt. The lender will inform you of the monthly payment amount during the application process. You can choose to pay more than the regular amount in order to try and clear what you owe more quickly, but some lenders will charge you a fee. Any fees that your lender charges should be made clear to you before you sign up.

A £25,000 personal loan is a type of unsecured borrowing as there will be no asset – such as your home – secured against the debt. Read our article ‘Secured vs unsecured loans: Which is best for me?’ to learn more.

Can I get a £25,000 loan with no credit check?

An affordability check and credit check are an essential part of a loan application in the UK. These can help the lender better understand whether you are able to afford the monthly repayments and ascertain how trustworthy a borrower you are. This means that some applicants will be rejected because there is too great a risk of repayments not being paid on time.

You can avoid being rejected by checking your eligibility online before you apply and keeping track of your credit score. We explain how to check your score in our article ‘The best way to check your credit score for free’. You can learn to improve it by reading ‘How to improve your credit score quickly’.

Even if you have a low credit score, it is still possible to get a loan. However, a bad credit loan will usually be more expensive than a standard loan. This is because the interest rate will often be higher and loan term longer. Read our article ‘How can I get a loan with poor credit?’ to learn more.

The key figures in a £25,000 loan

Here are the crucial numbers when you compare £25,000 loans:

  • Loan amount - What you can borrow will depend on the affordability criteria of the lender, your financial circumstances and your borrowing history. You may not be able to borrow the full £25,000, or you may be able to borrow as much as £50,000 or more.
  • Loan term - Many lenders will allow up to seven years to repay the loan, but some lenders will offer longer terms and others will limit the term depending on the amount borrowed.
  • Loan fees - Fees will vary depending on the lender you choose. Make sure that you check your documents carefully to understand any fees that may apply.
  • APR (annual percentage rate) - This is the annual rate that shows you the cost of borrowing the money in the first year. It takes into account the interest you are being charged as well as other applicable fees.
  • Representative APR (annual percentage rate) -This is the APR that the lender expects at least 51% of successful applicants to be offered. While you may get a higher or lower figure, it can be a good way to compare providers.
  • Early repayment charge - This is what some lenders will charge if you clear your debt early. There should be no charge for paying off up to £8,000, but 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. The rules are slightly different if you took out a loan prior to February 2011.

Your credit score is also important, as it is an assessment of how trustworthy a borrower you are. A low credit score will make rejection more likely, while a high score could mean you are offered the lender’s best rates.

How much will a £25,000 loan cost per month?

A £25,000 loan repaid over five years at a rate of 6.1% APR will mean a monthly repayment of £482.57 a month, costing £28,954.20 in total. You can increase the loan term to reduce the monthly payments, but it will make the overall cost greater as there will be more time for the debt to grow with interest. Shortening the term of the loan will result in you paying less interest, but your monthly payments will increase. It is important to ensure you can pay the monthly instalments on time and in full.

What can I use a £25,000 loan for?

Your lender will likely require you to state how you intend to spend the money as part of the loan application process. Common expenses will usually include:

  • A wedding
  • A car
  • Home improvements
  • Debt consolidation
  • A holiday

What can't I use a £25,000 loan for?

While you are free to use a personal loan for almost any purpose, there are a few important exceptions. Most lenders will reject your application automatically if you intend to use the the money for:

  • Gambling
  • Illegal activity
  • Buying shares
  • A deposit for a property

Borrowing for business purposes may also be restricted by some lenders. We cover specialist business loans in our article ‘What is a business loan?’.

Pros and cons of a £25,000 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 £25,000 loan

  • Spread the cost of a purchase
  • Stability of fixed monthly repayments
  • Widely available
  • Borrow at a lower long-term interest rate than most credit cards
  • Less direct risk to your assets compared to a secured loan
  • Can be repaid early in most cases (though sometimes for a fee)
  • Applications can be approved and money paid out relatively quickly

Cons of a £25,000 loan

  • No interest-free period
  • Can be difficult to borrow a small sum at an affordable rate
  • Missing repayments or failed applications can damage your credit score
  • Difficult to get the best interest rate with bad credit

Alternatives to a £25,000 loan

A £25,000 loan will not be the right option for everyone as there are a whole host of different ways to borrow money and spread the cost of expenses. Here are some alternatives to consider.

  • Secured loan - Your home, car or another valuable asset will be used as security, but you may be able to access much higher loan amounts and lower interest rates. Read our article ‘What is a secured loan?’ to learn more or go to our 'The best secured loans' article for the top deals.
  • Credit card - A credit card is a flexible way of borrowing money as you only pay back what you spend, unlike with a loan. You can also take advantage of limited-time 0% interest options, but you may find that your maximum spend is restricted by a low credit limit. Check out our article ‘Best credit cards in the UK’ for more information.
  • Remortgaging - This involves increasing what you owe on your current mortgage to borrow more money. We go into more detail our article ‘Remortgage to release equity from your home’.
  • Car finance - You may find that specialist car finance is a more simple option than a £25,000 loan. We weigh up the pros and cons in our article ‘Buying a car: what are the best finance options?’.