How to get a $20,000 personal loan

You can use a $20,000 personal loan to cover almost any large expense, such as a home improvement project, a wedding or a medical bill. But before you borrow such a significant amount of money, you should spend some time figuring out whether it’s the right move for you.

Before you take out a $20,000 personal loan, be aware of common eligibility requirements, where to find one and how to estimate your total borrowing costs.

How to determine if you need a $20,000 loan

Taking out such a large loan is a huge financial decision. If you take on more debt than you can afford to repay, there could be serious financial consequences, such as:

  • Stretching yourself too thin financially: Before you take out a loan, review your finances to see whether you can afford to repay the loan. If you take on too much debt, you may find it difficult to contribute to essential financial goals, like retirement.
  • Damaging your credit: If you fail to repay your loan, it could cause major damage to your credit score. As a result, it’ll be harder for you to qualify for future loans, like a mortgage or auto loan.

That said, here are some scenarios where taking out a $20,000 personal loan could improve your financial situation:

  • Consolidating high-interest debt: Do you have $20,000 worth of high-interest debt? Taking out a $20,000 loan to consolidate your debt could make sense if you can secure a lower rate.
  • Funding home improvements: Depending on the type of home improvements you make, taking out a personal loan to cover the costs could help you increase the value of your home.
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Where to get a $20,000 loan

You can get a personal loan from several places. Here are three types of financial institutions to consider:


Some banks, like TD Bank, offer personal loans. If you already have a relationship with one, you may receive an interest rate discount — usually 0.25 percent.

A potential con, however, is that banks have strict credit requirements — you may need good credit to qualify.

Credit unions

Credit unions can also be an excellent place to get a personal loan. Since they are member-owned, not-for-profit institutions, they sometimes offer better rates and have less-strict eligibility requirements than traditional banks. In addition, the maximum rate for most credit union personal loans — which is set by the National Credit Union Administration (NCUA) — is 18%. However, some short-term loans from credit unions have maximum rates as high as 28%.

One potential downside worth noting is that you often have to become a member to qualify for a personal loan with a credit union — which online lenders don’t require.

Online lenders

A major advantage of getting a personal loan from an online lender is that you can apply from anywhere in the world, as long as you have an internet connection. In addition, online lenders usually have less-stringent eligibility requirements than traditional banks. For example, some online lenders have minimum credit score requirements as low as 580. But note that if a lender approves with bad credit, they’ll likely charge you a high interest rate and fees. Some lenders have maximum rates over 30 percent.

Requirements to receive a personal loan

Eligibility requirements vary, but lenders typically consider these factors when you apply for a personal loan:

  • Credit score: You’ll likely need to have a good to excellent credit score to qualify for such a large loan, without a cosigner. In general, the higher your credit score, the better your chances of qualifying and securing a lender’s best rates. However, it’s important to note that some lenders specialize in offering personal loans to borrowers who have bad credit.
  • Debt-to-income (DTI) ratio: Your DTI ratio compares your monthly debt with your monthly income. Lenders review your DTI to assess whether you can afford to take on new debt. You can lower your DTI by paying down any outstanding debts.
  • Income: To qualify, you’ll need to show a lender that you have enough steady income to make your future monthly loan payments. You typically do this by attaching financial documents to your loan application, such as W-2s and bank statements.
  • Collateral: Most personal loans are unsecured, meaning they don’t require any collateral — something of value, like a car title or bank account — a lender can take if you default on your loan. Some lenders offer secured personal loans that require you to pledge collateral to qualify.
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Personal loan lenders that offer $20,000 loans

You can get a loan for this amount at several financial institutions, such as banks, credit unions or online lenders. Here’s a list of lenders that offer $20,000 loans to help jumpstart your search: