Personal loans come in amounts ranging from $1,000 to over $100,000, and $20,000 personal loans are widely available for those who qualify. For larger amounts, personal loans offer several advantages over credit cards: Interest rates are generally lower, they’re fixed, and you can choose from a range of repayment terms. This means your rate and payment won’t change over the life of the loan, and you’ll know exactly when your debt will be paid off.
So if you’re in need of a $20,000 personal loan, here’s how to get approved for the full amount.
Where to Get a $20,000 Personal Loan
Banks, credit unions and online lenders may offer personal loans. Each type of lender has its pros and cons, so do your research to determine which might best suit your needs and your credit profile.
[Read: Best Personal Loans.]
Steps to Get a Personal Loan
1. Check Your Credit Score
Your first step when attempting to get a personal loan is checking your credit score.
Because personal loans are generally unsecured, your credit history and credit score are crucial for determining whether you can be approved for a loan and for establishing the interest rate and terms you’ll be offered.
Requirements vary by lender, but generally, you need a credit score of at least 640. However, you may need a higher score to qualify for bigger loans. A score of 700 or higher increases your chance of being approved for a larger loan amount and getting a better interest rate.
If your credit score is not high enough to qualify you for the loan and rate you want, consider taking some time to improve it before applying. Many banks and credit card issuers allow customers to see their FICO scores for free, either on their statements or via their online banking portal.
2. Evaluate Your Borrowing Needs
It’s also important to carefully map out your financing needs. Borrowing too much means making higher payments and spending more on interest than necessary. On the other hand, borrowing too little could leave you looking for additional financing.
Once you confirm the amount you need, be sure that the payments will fit your budget, says Todd Nelson, head of consumer and small business banking at Truist. For example, a $20,000 loan with a 12% interest rate and five-year repayment has a monthly payment of $445. And you’d pay about $6,700 in interest over the life of the loan.
Payment for a $20,000 Personal Loan
| Repayment Term | ||||
| Rate | 3 Years | 5 Years | 7 Years | 10 Years |
| 6% | $608 | $387 | $292 | $222 |
| 9% | $636 | $415 | $322 | $253 |
| 12% | $664 | $445 | $353 | $287 |
| 15% | $693 | $476 | $386 | $323 |
| 18% | $723 | $508 | $420 | $360 |
| 21% | $754 | $541 | $456 | $400 |
If you altered the terms of the loan to a 9% interest rate and a three-year repayment term, your monthly payments would jump to $636, but you’d pay just $2,896 in interest. You save because shorter terms tend to come with lower interest rates, plus you’re making fewer payments.
As you can see, it’s important to play around with the numbers and decide what loan terms work best for your financial situation and goals.
“If the lender you’re researching has a loan calculator, be sure to check out the variables that impact your costs,” Nelson says. “For example, choosing a shorter repayment term can often save money in the long run.”
3. Go Loan Shopping
The best personal loan for you might not be the one for your best friend or neighbor. It’s important to do your own shopping and get custom quotes for your situation.
Once you know what loan term you want, you can begin comparing quotes from lenders.
Personal loan lenders offer a range of interest rates and terms, so it’s important to get several quotes before making a decision. Many financial institutions allow you to prequalify for a loan and get a quote online without impacting your credit score. You submit a few personal details, and the lender performs a soft credit check to give you an idea of what terms you’d qualify for. Keep in mind that the interest rate, loan amount, repayment period and other terms could change. You must submit an application, authorize a full credit check and go through the underwriting process to finalize your rate.
Nelson recommends that you make sure the lenders you’re considering allow you to pay down your balance early with no penalty. “This is particularly important in today’s economy. If you don’t use the entire $20,000 you’ve borrowed — or find that other funds have become available through sources like student loan forgiveness, a work bonus or tax refund — you can apply those additional dollars to pay down your loan at no additional cost.”
[CALCULATE: Use Our Free Personal Loan Calculator to Estimate Your Monthly Payments.]
4. Gather Your Documentation
When applying for a personal loan, expect lenders to document your identity, credit and income. You may be asked to provide:
— Identification. Valid government-issued identification, such as a passport, driver’s license or national identification card.
— Social Security number. This is usually required by lenders to perform a credit check.
— Personal contact information. The lender will need details such as your phone number, email address and physical address.
— Proof of income. This might include pay stubs and/or tax returns as well as bank, investment and retirement account statements. If you’re self-employed, lenders might ask for additional documentation, such as business licenses and profit-and-loss statements.
— Proof of employment. You may be asked to sign an employment verification form or provide a letter from your employer.
— Proof of residence. You can often use an official communication from a service provider, such as a utility bill, lease agreement or mortgage statement that shows your address.
[Read: Best 0% APR Credit Cards.]
5. Fill Out an Application
Once you’ve chosen a lender, you can fill out the application online or in person. Make sure all information is accurate; mistakes on your application can cause a delay in approval and funding — or even cause you to be declined.
Submit your application. If applying online, you’ll also upload your supporting documents. Otherwise, you’ll make copies and provide them to your lender. Some lenders may give you a decision instantly, while others can take up to a week. You can also find lenders that offer same-day or next-day personal loans to qualified applicants. Look for them if speed is important.
6. Review Your Offer and Accept the Loan
If your application is approved, the lender will issue a loan offer. This includes the loan amount, interest rate and repayment term. Review these details carefully and make sure the offer meets your needs.
If you agree with the terms of the loan, you can accept the offer. The lender will finalize and fund the loan. Usually, funding happens via electronic transfer, but you may be able to receive a check or even a debit card. If you’re consolidating debt, the lender might pay your creditors directly.
Average Cost of a Personal Loan
The cost of your loan depends on the loan amount, interest rate, repayment terms and lender fees, including origination charges.
The table below shows average the average interest rate for a 24-month personal loan over time.
Alternatives to Personal Loans
A personal loan isn’t your only option. Here are some alternatives that may better suit your needs.
— A home equity line of credit lets you borrow against the equity in your home. These come with longer repayment terms than most personal loans, which can make the payments more affordable for larger amounts. Interest rates are lower as well because the loan is secured by real estate. You can tap your credit line as needed, which makes it more flexible than a personal loan.
— A home equity loan also allows you to borrow funds secured by your home, though it takes the form of an installment loan and is disbursed at once. These loans also have extended repayment terms and come with fixed interest rates.
— A loan from family or friends could also serve as an option. Make sure you agree to terms that work for both parties and have a written agreement.
More from U.S. News
How to Get a $5,000 Personal Loan
Personal Loan vs. Personal Line of Credit
How to Get a $20,000 Personal Loan originally appeared on usnews.com
Update 09/05/25: This story was previously published at an earlier date and has been updated with new information.
