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How To Get a $20,000 Personal Loan

If you need to borrow $20,000, here are several places you can turn.

Author
By Jessica Walrack

Written by

Jessica Walrack

Writer

Jessica Walrack is a freelance finance writer and journalist with over a decade of experience. During that time, she’s written hundreds of articles about loans, insurance, banking, mortgages, credit cards, budgeting, and taxes for well-known publications including CBS News MoneyWatch, USA Today, US News and World, Investopedia, and The Balance Money.

Edited by Charlie Tarver

Written by

Charlie Tarver

Editor

Charlie is an editor for Credible’s personal loans vertical. His time working on various desks has seen him edit a wide range of content, from long-form policy analysis to defense briefs and celebrity Q&As. After getting his start at Stars and Stripes as a Dow Jones News Fund intern, Charlie spent more than 5 years copy editing articles for The Hill’s website and print edition.

Updated February 14, 2024

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances.

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Credible takeaways

  • Before taking out a $20,000 loan, carefully consider your budget, income stability, and reasons for borrowing.
  • You can find $20,000 loans from a range of lenders, and may be able to borrow $20,000 from accounts you already have.
  • The cost of a $20,000 loan will depend on its repayment structure, APR, and loan term.

Are you in need of a $20,000 loan but aren’t sure how to get one? Good news — there are several possible options, from personal loans to borrowing against your 401(k) plan. However, each route has its pros, cons, and eligibility requirements. Read on to learn about what to consider before borrowing $20,000, the different ways to do so, and what to expect in terms of cost.

 

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What to consider before taking out a $20,000 loan

Before you take out a $20,000 loan, it’s important to review your budget. Look over your current income as well as your expenses to figure out the maximum monthly payment amount you can afford.

When setting on an amount, be sure to consider any income fluctuations you tend to experience. You want to be able to comfortably afford the payment in your best and worst months. The payments will also likely extend for several years to come, so consider the stability of your income source in the future. Is it reliable and long-term, or is there a chance it’ll be interrupted?

Another consideration is if the cost is worth it. A $20,000 loan could cost you thousands of dollars in interest and fees. Consider how you plan to spend the money and if it will offer returns that justify those costs.

Where to find a $20,000 loan

If you decide you want to move ahead and borrow $20,000, here are some places you can turn.

Personal loan lenders

Personal loans are installment loans that provide you with a lump sum of money, typically within days of applying (some lenders offer same-day personal loans). The loans are repaid, plus interest and fees, over a set term. In most cases they’re unsecured, but some lenders do offer collateral loans, which involve you pledging an asset to secure the loan. This can improve your chances of qualification or lower your rate.

A wide range of financial institutions offer personal loans, from banks and credit unions to personal finance companies and fintech lenders. While available loan amounts can range from $600 to $200,000 (depending on the lender), $20,000 loans are a fairly common offering. It’s also common for lenders to allow repayment terms up to seven years (but choosing a shorter repayment period could reduce your overall loan costs).

As far as qualifying, you’ll often need good or better credit (a FICO score above 670), and a stable income source that shows you can afford the payments. Annual percentage rates (APRs) for personal loans typically range from around 6% to 36%, depending on your credit profile and other factors.

Learn More: Best Personal Loans

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Tip

When narrowing down your options, focus on APRs. These take into account the interest rate and any upfront loan fees, such as origination fees, making them a better way to compare loan costs than interest rates alone.

You can typically check if you prequalify with multiple personal loan lenders in minutes, without hurting your credit score. This allows you to get a better idea of the rates and terms you may be eligible for with each lender. (Prequalification is not an offer of credit, however, and your final rate may be different. When you proceed to formally apply for a loan, the lender will conduct a hard credit inquiry that can bring your score down by a few points temporarily.)

Learn More: Does Applying for a Loan Hurt Credit?

Personal loan lenders that offer $20,000 loans

Where can you find personal loan lenders that offer $20,000 loans? In short, there are very many to choose from. Here’s a quick list:

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4.24.2

Credible rating

Fixed (APR)

7.49% - 25.49%

Loan Amounts

$5000 to $100000

Min. Credit Score

700

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on Credible’s website

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3.93.9

Credible rating

Fixed (APR)

7.80% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

620

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on Credible’s website

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4.44.4

Credible rating

Fixed (APR)

-

Loan Amounts

$2500 to $40000

Min. Credit Score

660

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on Credible’s website

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4.64.6

Credible rating

Fixed (APR)

8.49% - 17.99%

Loan Amounts

$600 to $50000

Min. Credit Score

760

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on Credible’s website

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4.54.5

Credible rating

Fixed (APR)

8.49% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

600

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on Credible’s website

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4.94.9

Credible rating

Fixed (APR)

8.99% - 29.99%

Loan Amounts

$5000 to $100000

Min. Credit Score

Does not disclose

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on Credible’s website

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44

Credible rating

Fixed (APR)

8.99% - 35.99%

Loan Amounts

$2000 to $50000

Min. Credit Score

600

Check Rates

on Credible’s website

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44

Credible rating

Fixed (APR)

9.57% - 35.99%

Loan Amounts

$1000 to $40000

Min. Credit Score

660

Check Rates

on Credible’s website

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3.93.9

Credible rating

Fixed (APR)

9.95% - 35.99%

Loan Amounts

$2000 to $35000

Min. Credit Score

550

Check Rates

on Credible’s website

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4.34.3

Credible rating

Fixed (APR)

-

Loan Amounts

$5000 to $35000

Min. Credit Score

710

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on Credible’s website

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4.34.3

Credible rating

Fixed (APR)

11.69% - 35.99%

Loan Amounts

$1000 to $50000

Min. Credit Score

560

Check Rates

on Credible’s website

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3.93.9

Credible rating

Fixed (APR)

11.72% - 17.99%

Loan Amounts

$3000 to $40000

Min. Credit Score

640

Check Rates

on Credible’s website

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44

Credible rating

Fixed (APR)

-

Loan Amounts

$20000 to $200000

Min. Credit Score

660

Check Rates

on Credible’s website

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3.73.7

Credible rating

Fixed (APR)

14.30% - 35.99%

Loan Amounts

$3500 to $40000

Min. Credit Score

640

Check Rates

on Credible’s website

View Details

3.93.9

Credible rating

Fixed (APR)

18.00% - 35.99%

Loan Amounts

$1500 to $20000

Min. Credit Score

540

Check Rates

on Credible’s website

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All APRs reflect autopay and loyalty discounts where available | LightStream disclosure | SoFi Disclosures | Read more about Rates and Terms

Home equity loan lenders

If you’re a homeowner sitting on a bit of equity (more than 20%), another option is to take out a home equity loan or home equity line of credit (HELOC). You can find these from many banks, credit unions, and mortgage companies.

Due to the collateral required, they often have lower interest rates than unsecured loans, and more flexible eligibility requirements. However, there are a few downsides. If you default on a home equity loan, your home could go into foreclosure. Some home equity-based loans may also have steep closing costs. And, they can take more than a month to close.

Learn More: HELOC vs Personal Loan

Your life insurance company

Do you have a permanent life insurance policy with a cash value component? You may be able to borrow $20,000 from your insurer if your cash value balance is sufficient to secure the loan. Life insurance loans can be attractive because they come with competitive interest rates and don’t require a credit check. Your cash value will also remain intact and you won’t be required to make repayments according to any specific schedule.

But there are a couple of hazards to be aware of. If you don’t make sufficient payments on the loan, the loan’t interest could potentially eat away your cash value and cause your policy to lapse. That, in turn, could result in a taxable event. And if you don’t repay the loan before you pass, the outstanding balance will reduce the death benefit your beneficiary receives. Similarly, if you surrender the policy before paying back the loan, your insurer will deduct the outstanding loan balance from the cash value.

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Tip

Instead of a life insurance loan, a withdrawal from your policy’s cash value could make sense in certain scenarios. Discuss with your life insurance agent or certified financial planner to better compare your options.

Your 401(k) plan provider

If you’ve accumulated a vested balance of at least $40,000 in your 401(k) account, you may be able to take out a $20,000 loan against it. Many plan providers offer 401(k) loans in amounts up to 50% of your vested balance or $50,000, whichever is less, with terms of up to five years (though this may be extended if used to purchase a primary residence). Like life insurance loans, 401(k) loans don’t require a credit check. Unlike a life insurance loan, the interest you pay on a 401(k) loan goes back into your account.

But they’re not without risks. If you leave your job before the loan is paid off, the entire amount may come due immediately, and if you default you could face severe tax consequences. Plus, you could lose out on years of gains in your retirement account, as borrowed funds are not invested.

Learn More: 401(k) Loan vs. Personal Loan

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Warning

If you default on a 401(k) loan, any unpaid amount is categorized as a plan distribution, requiring you to include any untaxed amount in that year’s gross income. If you’re under 59 ½, you may also have to pay an additional 10% tax.

How much will a $20,000 loan cost?

The cost of a $20,000 loan will depend on factors like the interest rate, repayment terms, and fees. Here are the main factors that impact your cost on a personal loan:

  • Annual percentage rate (APR): The federal Truth in Lending Act requires lenders to show consumers the annual cost of credit (including interest and upfront fees) expressed as a yearly rate. APRs serve that purpose, making them an ideal way to compare between credit options.
  • Fees: A loan’s fees aren’t always split up equally over the life of the loan. Origination fees, for example, are often deducted from your personal loan funds upfront. So, take note of how fees are charged and if they’ll impact your loan balance. You may need to borrow more if a fee is going to reduce the loan amount you receive. Also take note of other fees, like late or returned payment penalties.
  • Repayment term: The repayment term is the number of months or years you’re given to repay the loan amount. Since the interest rate applies as long as you’re repaying the loan, longer terms generally result in higher costs.

With an understanding of the main factors that influence the costs of a $20,000 personal loan, let’s look at how the cost can vary for borrowers with different credit profiles.

Learn More: APR vs Interest Rate on a Personal Loan?

Personal loan cost comparison

Loan 1 (below-average credit borrower)
Loan 2 (average credit borrower)
Loan 3 (above-average credit borrower)
Loan amount
$20,000
$20,000
$20,000
Loan term
60 months
60 months
60 months
APR
27.89%
24.40%
19.50%
Annual interest rate
24.99%
22.00%
19.50%
Origination fee percentage (paid upfront)
8%
5%
0%
Origination fee (in dollars)
$1,600
$1,000
$0
Total loan amount disbursed
$18,400
$19,000
$20,000
Monthly payment amount
$575
$552
$445
Total interest cost
$14,522
$13,143
$6,693
Total cost of interest plus upfront fees
$16,122
$14,143
$6,693

In summary, the lower your APR, the lower your costs per month and overall. When you apply for a personal loan, lenders will assess your credit profile to determine if you qualify. If you do, you’ll be assigned an APR within the lender’s range based on the amount of risk it thinks you present. In general, the better your credit profile and financial picture, the lower your costs.

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Keep in mind

Loan costs can vary greatly depending on the type and the lender you choose, so it’s important to review potential contracts carefully. If you have any questions or concerns, consult with a financial professional before signing anything.

How to apply for a $20,000 loan

The way you apply for a $20,000 loan is going to depend on the type of loan you’re seeking. You’ll have to contact the lender to find out its specific process. However, here’s how it typically works for personal loans:

  1. Check your credit: Before you do anything else, review your credit reports and scores. You can check them for free at AnnualCreditReport.com. Your eligibility is going to depend heavily on them, so you want to make sure they’re in the best possible shape. Correct any errors and look for quick improvement opportunities, like paying down a credit card balance or using Experian Boost.
  2. Shop around: With so many lenders on the market, it pays to shop around and prequalify with multiple lenders. Focus on ones that offer the loan type, amount and terms you’re looking for — and have eligibility requirements you can meet — to help narrow your options.
  3. Compare quotes: Compare prequalification quotes side by side and look for the one that offers the best overall value for your needs.
  4. Apply with the best lender: Once you find the best fit, move forward with the full application process for that lender. You’ll often need to allow a hard credit inquiry and provide proof of your identity, residence, income, and employment. Soon after, the lender will provide you with its decision. If you accept the loan offer, you could receive your funds as soon as the same business day, or within a few business days, depending on the lender.

Learn More: How Do Personal Loans Work?

$20,000 loan FAQ

Can you get a $20,000 loan with bad credit?

Yes, it’s possible to get a $20,000 loan with bad credit. While it would be difficult to get an unsecured personal loan with a low score, your credit typically isn’t a factor in getting a 401(k) loan or life insurance loan. Home equity loans tend to have more lenient credit score requirements than unsecured loans, as well.

Are $20,000 loans hard to get?

It depends on the type of $20,000 loan you want. Personal loans of $20,000 are somewhat difficult to get, as they require good credit and sufficient income to cover the payments. Home equity loans can be easier to get for homeowners with equity, but have a longer application process and may have steeper upfront costs. Other loan types, like 401(k) and life insurance loans can be very easy to get in terms of credit and cost, but you’ll need to have a plan or policy in place with a sufficient balance, and they’re not without risks.

Should I get a $20,000 loan?

Whether or not you should get a $20,000 loan will depend on a few factors. It can be a good idea if you have a stable income, can comfortably afford the payments, and plan to use it in a way that will improve your overall financial situation.

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Meet the expert:
Jessica Walrack

Jessica Walrack is a freelance finance writer and journalist with over a decade of experience. During that time, she’s written hundreds of articles about loans, insurance, banking, mortgages, credit cards, budgeting, and taxes for well-known publications including CBS News MoneyWatch, USA Today, US News and World, Investopedia, and The Balance Money.