How And Where To Get A $20,000 Loan
Miranda Crace6-minute read
PUBLISHED: November 06, 2023
If you need $20,000 fast, a personal loan could be a good option. Personal loans are typically offered in amounts ranging from $1,000 to $50,000 and can be used for most types of expenses – including medical bills, expensive personal purchases and debt consolidation. Although well below the maximum allowable amount for most lenders, $20,000 is still a lot of money, and you must meet certain qualifications for a lender to approve you for the loan.
Let’s walk through exactly what you need to get a $20,000 loan, and whether this loan size is a good choice for you.
How To Get A $20,000 Loan
Getting a personal loan is generally a straightforward process requiring less time than the time required to secure most types of loans. Follow the below steps for a successful personal loan application.
1. Check Your Credit Report
A good credit score is important for loan eligibility. If you’re seriously thinking of applying for a loan, your first step should be to check your credit score if you haven’t in a while. The state of your credit score will greatly influence your eligibility for a loan, especially a $20,000 loan. That’s because personal loans are most often unsecured (i.e., they don’t require collateral), which means that lenders look closely at your credit history to determine your creditworthiness and interest rate.
The minimum credit score that a lender will approve for a personal loan is generally in the 610 – 640 range, but this can vary among lenders, and some institutions may require a higher score for a $20,000 loan. For a lower interest rate, aim for a score of at least 650.
2. Determine The Loan Amount You Need
If you’re pursuing a $20,000 loan, you should know without a doubt that $20,000 is the amount you need. Borrowing too much will result in paying back money you didn’t need to borrow, and borrowing too little could mean not having enough to cover your expenses and needing another loan.
Keep in mind, too, that a higher loan amount will mean higher monthly payments. If possible, calculate your debt-to-income ratio (DTI) to see how much you could reasonably afford every month. Lenders will also take your DTI into account when reviewing your loan application.
Rocket Loans℠ offers personal loans from $2,000 to $45,000.
3. Shop Around And Compare Lenders
Lenders vary in what they can offer for loan terms, interest rates and more, so it’s important to explore multiple options. Getting prequalified with multiple lenders can give you a closer estimate of the amount you qualify for, and doing so won’t affect your credit score. Prequalification can also tell you upfront whether you’re eligible for a $20,000 loan.
To get prequalified, you’ll need to provide your personal information, Social Security number, employment status and estimated income.
4. Gather The Necessary Documents
Even if you’re still deciding on a lender, it’s wise to begin gathering the documents you’ll need for an application. You’ll be required to provide documentation displaying proof of identification, address and income. Having these documents on hand for when you need them can speed up the loan application process.
5. Apply With Your Chosen Lender
Once you’ve decided on the lender with the best deal and have all your documentation together, it’s time to submit a full application. Your lender will run a hard credit check, which can temporarily bring your credit score down by a few points, but this is a normal part of the process.
The lender will inform you of their decision regardless of whether your application has been approved or denied. Approval and delivery of funds typically occurs in 1 – 7 business days.
6. Accept Your Loan Offer
If you’re approved, your lender will reach out to you with an official loan offer detailing the loan amount, interest rate, loan term and more. If you accept the terms of this loan offer, you can expect to have the funds in your bank account within a few days.
Once you’ve received the money, you’re free to use it as you intended.
7. Begin The Repayment Process
You’ll typically begin the loan repayment process within 30 days of receiving your funds. Make sure to pay your bill on time and in the full monthly amount each month. Late or missed loan payments can hurt your credit score and cause you to incur late fees. Setting up automatic payments is a good way to ensure you’re never late on a payment.
Where To Get A $20,000 Personal Loan
Personal loans are often available through traditional banks, credit unions and private lenders. You may find the best loan offers from institutions that you have a standing relationship with, such as your personal bank or credit union. Even so, it’s best to shop around until you find the rate and terms most ideal for your situation.
Rocket Loans can offer a personal loan terms of 36 or 60 months, with an annual percentage rate (APR) of a minimum of 9.116% (rate with autopay discount) to a maximum of 29.99% (rate without autopay discount).1
Can You Get A $20,000 Loan With Bad Credit?
If you have a credit score lower than the minimum requirement, you likely won’t qualify for a $20,000 loan. It’s still worth shopping around and attempting to prequalify with different lenders, though, to see if one will accept your credit score. If not, you might consider one of these options:
- A co-signed loan: A co-signer is someone who accepts responsibility for a loan if you can’t pay it off. Having a co-signer on your loan – if a lender allows it – can assure a lender they’ll get their money back if they approve you for a loan.
- A secured loan: Though most personal loans are unsecured, some lenders offer secured loans for borrowers with a lower credit score. If you can offer up a valuable possession or asset, a lender will likely be more lenient with their credit score requirement.
- P2P lending: Peer-to-peer (P2P) lending allows investors to finance borrowers independently online. Because financial institutions aren’t involved, it’s possible to find an investor willing to take a chance on a lower credit score.
- A family loan: If you know a family member who would lend you the money, you can borrow directly through them. It’s not a bad idea for family loans to still include a legal contract and for an attorney to be present at the signing, but neither is required.
If your credit rating is poor, the best strategy, though, is to work to repair your credit. Maintaining a good or excellent credit score can open you up to various loan options and the lowest rates.
Is A $20,000 Loan Right For You?
A personal loan can be extremely helpful in an emergency or if you’re struggling to pay for necessary home improvements. A personal loan can also be used to consolidate credit card debt, which involves replacing many debts with a single monthly payment.
However, personal loans carry some risks, too. For example, if you have a modestly low credit score, your loan will come with a higher interest rate than if your credit score was higher. Origination fees, potential late payment fees and the possibility of prepayment penalties are also worth looking into and considering. It’s important to know, too, that missed payments on a personal loan can bring down your credit score, and defaulting on a loan can have severe consequences for your credit and overall financial situation.
Make sure your finances can handle an additional monthly payment of the required amount before you decide to take out a personal loan.
FAQs About $20,000 Loans
Here are some common questions asked by people who want to know more about $20,000 personal loans.
What credit score do I need for a $20,000 loan?
The required credit score for a $20,000 personal loan will vary from lender to lender, but a score of at least 650 will typically land you a decent interest rate and reasonably good repayment terms. Check with different lenders to find out their credit score requirements.
Is it hard to get approved for a $20K loan?
The difficulty of getting approved for a $20,000 loan will depend on a particular lender’s requirements and your personal creditworthiness. If you have a credit score under 650 or the minimum amount required by a lender, you may have trouble getting approval for a $20,000 loan.
Can I borrow $20,000 from a bank?
Yes, a traditional bank may offer personal loans of $20,000 to qualifying borrowers. Alternative sources for a $20,000 loan include credit unions, private online lenders and lending institutions such as Rocket Loans.
A $20,000 personal loan can be used for various expenses but will require the borrower to be financially stable enough to pay the money back in full over an agreed-upon time period. By finding the right lender for the loan you need and submitting an application, you could have that $20,000 sooner rather than later.
Interested in Rocket Loans? Get started today and see how much you prequalify for.
1Example loan: A 5-year $16,000 loan with a 14.55% interest rate and a 6.95% ($1,112) origination fee would have 59 scheduled monthly payments of approximately $376.83 and 1 final monthly payment of approximately $399.09 for an APR of 17.90%.
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