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We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
We're on a mission to improve the finances of the nation by helping you to spend wisely and save money
By Matt Fernell, Editor-in-Chief at Finance.co.uk.
A £25,000 loan could help you clear expensive debts, buy your dream car or make home improvements. Here’s how to find a £25,000 loan that works for you.
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We’ve partnered with Loans Warehouse, whose award-winning service can help you find the right loan.
So that we can find the best interest rates available to you, we just need to know:
The term of the loan you want
Your financial situation
Your personal details
You’ll then get a decision within an hour, and we’ll talk you through your options to help you find the right £25k loan.
If you want to borrow £25,000, you can get an unsecured or secured loan.
An unsecured loan, also known as a personal loan, doesn’t require you to put down any security. You will need a good credit rating to get a £25,000 personal loan, as this is the maximum most lenders offer.
A secured loan, also known as a homeowner loan, requires you to put down a valuable asset, usually your home, as collateral. You can borrow more with a secured loan, but your home will be at risk if you miss your payments.
Which option is right for you depends on your financial situation and credit score. You are unlikely to be eligible for a secured loan if you don't own your home.
To be eligible for a £25k loan, you will usually need to:
Be a UK resident
Be at least 18 years old or 21 with some lenders
Have a job with a steady income
Have a good credit score
Some lenders will only offer you a loan if you have a current or savings account with them.
If you want to borrow £25k with a secured loan, you will need to own your own property with enough equity to cover the amount you borrow.
We use your information to perform a ‘soft check’ on your credit record. This allows us to show you rates you’re eligible for with zero impact on your credit score.
You can work out how much a £25,000 loan will cost to repay if you know the interest rate (APR) and the term of the loan.
For example, if you wanted a £25,000 loan over 5 years at an APR of 8%, your monthly repayment would be £503.58, with a total repayable amount of £30,214.58. This means the loan would cost you £5,214.58 in interest over the 5 years.
If you borrow over a longer term, you can reduce your monthly payments, but you’ll pay more interest overall.
For example, the same £25,000 loan over 10 years would be £299.64 a month, and the total amount repayable would be £35,957.26. Therefore the overall cost would be £10,957.26, more than double compared to paying over 5 years.
To determine the right loan term, consider how much you can afford to repay each month. The more you can pay off each month, the less interest you will pay overall, but make sure you can comfortably afford the repayments.
It is possible to get a £25k loan if you have a poor credit rating, but you will have less choice of lenders, especially if you want an unsecured loan.
Secured loans are easier to get if you have a poor credit score because there is less risk to the lender. When you borrow on a secured basis, you are putting your property down as security, which means the lender can use the equity in your home to make up any losses they suffer if you default on your loan.
Any loan with bad credit usually comes with a higher interest rate, so you need to make sure you can afford the repayments before you apply. If you fail to keep up with your repayments, it could damage your credit rating further or even put your home at risk if you have a secured loan.
If you’re struggling to manage your borrowing and improve your credit rating, a debt consolidation loan could help. You can use this to pay off your existing expensive debt, leaving you with just one manageable payment.
The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.
APR is short for Annual Percentage Rate, and it shows the overall cost of your loan.
Any extra fees or charges are added to the loan amount before APR is calculated.
It's a legal requirement for credit lenders to show their APR so an easy and fair comparison of interest rates can be made between lenders.
Most lenders aren’t concerned with how you will use your loan, so you can effectively spend it on whatever you like.
When you apply, you may be asked why you want the loan, but this is usually to help you find the right loan. Some of the main reasons people get a £25k loan include:
Making home improvements
Consolidating any existing debts
Paying for a big purchase like a new car or an expensive holiday
However, there are some exclusions you need to be aware of. For example, a lot of lenders won’t lend you money for:
Gambling or high-risk investments
Purchases of property or land
Timeshares
How long it takes to get your loan depends on whether you get a secured or unsecured loan.
When you apply online for an unsecured loan, you can get the money on the same day as you apply as long as the lender has all the information they need.
The application process for a secured loan can take a couple of weeks because the lender will need to do more checks, and you may need to submit more documentation.
The loan provider may also want to conduct a valuation or survey of your property to check its value and condition.
It is possible to pay your loan back early or make overpayments, but most lenders will have an early repayment charge (ERC) you’ll need to pay to do this.
The ERC you will need to pay is usually based on a percentage of your remaining loan balance or one or two months’ interest. That means the lower the balance, the lower the fee you’ll need to pay.
If you think you may be able to pay your loan back early, check the terms and conditions when you apply to see what charges you could face.
If you don’t think you’ll be able to repay your loan, contact the lender as soon as possible. They could be able to help by working out a new repayment plan you can afford or authorising a payment holiday to give you some time to get your finances back on track.
You will probably face late payment fees and interest if you miss your repayments without telling your lender. It will also harm your credit rating and could put your home at risk if you have a secured loan.
