How and where to get a $20,000 loan

If you’ve got some unexpected bills to pay or some home improvements you’d like to tackle, a personal loan can help you make it work. You can typically borrow $1,000 to $50,000 with a personal loan, so a $20,000 loan is a doable goal. Learn how to apply for a $20,000 loan, how to find a lender, and how to decide if it’s the right move for you.

Key Takeaways

• If you need access to $20,000, a personal loan can be a good fit.
• Before you apply, you’ll want to check your credit report, determine the loan amount you need, and shop around and compare lenders.
• There are ways to land a $20k loan if you have less-than-great credit.

7 steps to get a $20,000 loan

You'll need to follow the step-by-step process and meet personal loan requirements to apply successfully. It usually takes less time than other types of loans. Here are 7 steps to getting a $20,000 personal loan.

1. Check your credit report

You'll want to regularly check your credit score.

You can order at AnnualCreditReport.com a free weekly credit report from each of the three bureaus: Experian®, Equifax®, and TransUnion®.  Look for errors, such as inaccurate or missing information. If you find mistakes, file a dispute with the credit bureau. From there, per federal law, the credit bureau must investigate the matter between 30 to 45 days.

Your credit report also affects your credit score. Your free credit report may not include your credit score, but you can order it from each bureau for a fee. The most common type of credit score is the FICO Score ®, which ranges from 300 to 850. Higher scores are more trustworthy.

Here’s the breakdown:

• Poor: 300 – 579
• Fair: 580 – 669
• Good: 670 – 739
• Very Good: 740 – 799
• Exceptional: 800 – 850

The required credit score for a personal loan is usually 610 – 640. You may need a higher credit score to borrow amounts as large as $20,000.

2. Determine the loan amount you need

Next, you’ll want to figure out how much you need to borrow to be sure a $20,000 loan is appropriate.

For example, if you’re borrowing money to pay for home improvements, you’ll want to get estimates for the projects you need done. If your roof needs repair, get estimates from a few different companies.

It’s important to know that a personal loan increases your debt-to-income ratio (DTI), which can affect your ability to qualify for other loans, like a mortgage. Your DTI ratio is calculated by dividing your total monthly debt payments by your gross monthly income and multiplying by 100 to get a percentage. The lower your DTI ratio, the better your odds of landing a personal loan.

3. Shop around and compare lenders

Before you apply, consider getting prequalified for a personal loan. When you get prequalified, you answer a series of personal and financial questions. Lenders usually perform a soft pull on your credit when you apply for prequalification, which won’t affect your credit score.

From there, your lender will provide an estimate of the loan it expects you can qualify for. Currently, Rocket Loans℠ offers personal loans that range from $2,000 to $45,000.¹

When it’s time to pull the trigger and officially apply for a loan, you’ll have a better idea of what to expect.

4. Gather the necessary documents

When you're ready to apply, you'll need to gather the required documents for a personal loan. Lenders typically require the following documents:

• Application form
• Bank account information for loan deposits
• Employer and income verification
• Proof of identification
• Proof of address
• Proof of income

5. Apply with your chosen lender

Once you’ve shopped around and chosen a lender, you’ll need to complete the loan application, submit the requested documents, and prepare for a hard inquiry on your credit. A hard credit inquiry will lower your credit score by a few points, but it’s only a temporary dip. And it usually lingers on your credit report for up to a year.

You usually can apply for a personal loan online. In some cases, you might need to set foot in a brick-and-mortar location to sign documents in person.

Your credit history and score will determine your rates and approval.

Once you apply, you can expect to receive notification of the status of your loan application within a few business days to a week.

6. Accept your loan offer

Once you’ve been approved, you’ll need to accept the loan offer, sign all documents, and provide bank account information for the loan deposit. You can expect the loan proceeds in your account within a few days.

Before signing the paperwork, ask plenty of questions. If you’re not sure about your interest rate, repayment terms, any prepayment penalties, or assessed fees, you’ll need to ask your lender before you sign off on the loan.

Once the money is deposited into your account, you can use it for whatever you like. While you can borrow money for pretty much any purpose, make sure you have good reasons for getting a personal loan money because you’ll need to repay it, with interest.

7. Begin the repayment process

Loan repayments usually begin after 30 days. You’ll want to budget for these monthly payments and make sure you don’t fall behind or miss a payment.

To stay on track, you can set up automatic payments. You also can ask to change your payment due date to better align with your cash flow.

Where to get a $20,000 personal loan

Credit unions, banks, private lenders, and online lenders typically offer personal loans. To get the best personal loan rates and terms, be sure to shop around.

You’ll also want to find a lender that offers personal loans with the lowest annual percentage rate (APR) and the best terms.

Rocket Loans features personal loan terms of 36 or 60 months.

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

There’s no such thing as “bad” credit. However, a poor or fair credit score can make it more difficult to get a loan and obtain the lowest available interest rates and most favorable terms.

If you have less-than-stellar credit, there still are ways to qualify for a $20,000 personal loan.

• Use a co-signer. When you apply with a co-signer, the lender will consider their finances and credit score as well as yours. If you default on the loan, the co-signer must repay the loan. Rocket Loans currently doesn’t allow co-signers for personal loans.
• Choose a secured loan. A secured loan requires the borrower to offer collateral. This could be a vehicle, your home, or an investment account. When you offer collateral on your secured loan, you likely will have an easier time getting a personal loan. However, you risk losing that asset should you struggle with your payments.
• Use a peer-to-peer lending platform. P2P lending is a way to borrow money directly from individuals without a financial institution acting as a go-between. P2P loans might have less stringent eligibility requirements and more flexible repayment terms. On the flip side, they might come with higher interest rates and fees.
• Consider a family loan: Another option is to borrow money from a trusted friend or family member. While a family loan may allow you to borrow money with a low interest rate or no interest rate, it’s still a good idea to draft and sign a loan contract to ensure you’re both on the same page. You should also consider whether borrowing money from a family member will strain your relationship. Regardless, you’ll want to work on repairing your credit score. That way, you can improve your creditworthiness in the future. Pay your bills on time and decrease your DTI.

Is a $20,000 loan right for you?

A $20,000 loan is a significant financial commitment, so you’ll want to carefully weigh the pros against the cons and be ready to make payments.

Using a personal loan for home improvements or to consolidate high-interest debts like credit cards can save you money on interest and reduce your monthly payment.

If you have a lower credit score, you may pay higher interest rates, which in turn increases the cost of borrowing. Plus, loan fees and potential late fees can also add to the debt burden. Should you default on a loan, it could have significant financial – and credit-related – consequences.

You can stay on course and avoid spiraling into default by keeping up with your monthly payments.

FAQ

Here are answers to common questions about applying for a $20,000 personal loan.

What credit score do I need for a $20,000 loan?

The required credit score for a $20,000 personal loan varies by lender. While a minimum score of 610 to 640 is usually good enough, you may need a score as high as 650 to borrow $20,000 with a competitive 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 the lender’s requirements and your personal creditworthiness. If you have a lower credit score, you may have trouble qualifying 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.

The bottom line: Weigh the benefits and risks of a $20,000 personal loan

It’s important to review your financial situation before applying for a $20,000 loan. In short, figure out how much you truly need to borrow. Understanding your credit score also helps you compare lenders.

Interested in a $20,000 loan? You can apply for a personal loan with Rocket Loans today.

¹ All loans are made by Cross River Bank, a New Jersey state chartered commercial bank, Member FDIC, Equal Housing Lender. All loans are unsecured, fully amortizing personal loans. Eligibility for a loan is not guaranteed. This is not a deposit product. Please refer to our disclosures and licenses page for state-required disclosures, licenses, and lending restrictions.

Qualified clients using Rocket Loans will see loan options for a 36 or 60 month term, and APR ranges from a minimum of 8.01% (rate with autopay discount) to a maximum of 29.99% (rate without autopay discount) depending upon their credit profile. An origination fee of up to 9.99% is charged for each loan. This fee is deducted from the balance before funds are disbursed to the client. For example, 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%. Borrower must be a U.S. citizen or permanent U.S. resident at least 18 years of age. All loan applications are subject to credit review and approval and offered loan terms depend upon credit score, requested amount, requested loan term, credit usage, credit history and other factors. Not all borrowers receive the lowest interest rate. To qualify for the lowest rate, you must have excellent credit, meet certain conditions, and select autopay. Rates and Terms are subject to change at any time without notice.