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Best $20,000 personal loans and top alternatives

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Published on April 29, 2024 | 4 min read

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Key takeaways

  • You can borrow a $20,000 personal loan through most banks, credit unions and online lenders.
  • Assess your needs and only borrow what you can afford to repay to avoid damaging your credit and overall financial health.
  • Home equity loans, credit cards and HELOCs could be viable alternatives to a personal loan if you struggle to qualify.

You can use a $20,000 personal loan to cover almost any large expense, such as a home improvement project, wedding or medical bill. But before you borrow such a significant amount of money, you should know if it’s the right move for you. Determine what you need to qualify, where to find a $20,000 loan and how to estimate your total borrowing costs before you apply.

Best $20,000 personal loans

APR range Loan amount range Minimum credit score requirement
LightStream 6.94%-25.29%* with AutoPay $5,000–$100,000 695
SoFi 8.99%-29.49%* with Autopay $5,000–$100,000 No requirement
Discover 7.99%-25.29% $2,500–$40,000 660
Upgrade 9.99%-35.99% $1,000–$50,000 580
LightStream logo

LightStream

Rating: 4.7 stars out of 5
4.7
Learn more in our Bankrate review

Bankrate's view

Green circle with a checkmark inside

Pros

  • Rate Beat program
  • No fees
  • Fast approval and funding
Red circle with an X inside

Cons

  • No prequalification option
  • Requires a long credit history
  • High minimum loan amount
SoFi logo

SoFi

Rating: 4.7 stars out of 5
4.7
Learn more in our Bankrate review

Bankrate's view

Green circle with a checkmark inside

Pros

  • Allows co-borrowers
  • Optional fees and autopay discount
  • Wide range of loan amounts
Red circle with an X inside

Cons

  • Must have at least good credit to qualify
  • No co-signer option
  • High minimum loan amount
Discover logo

Discover

Rating: 4.8 stars out of 5
4.8
Learn more in our Bankrate review

Bankrate's view

Green circle with a checkmark inside

Pros

  • Low rates
  • Long repayment terms
  • No origination fees
Red circle with an X inside

Cons

  • Must have good credit or better
  • High minimum annual income requirement
  • High late fee
Upgrade logo

Upgrade

Rating: 4.7 stars out of 5
4.7
Learn more in our Bankrate review

Bankrate's view

Green circle with a checkmark inside

Pros

  • Allows co-borrowers
  • Flexible credit requirements
  • Fast approval and funding
Red circle with an X inside

Cons

  • High maximum APR
  • Origination fees
  • Limited info available online

Long-term costs of a $20,000 personal loan

The overall cost of your loan depends on your interest rate and repayment terms. With some lenders, the cost will be higher because of additional fees like origination fees, prepayment penalties and late payment fees. You can use a personal loan calculator to estimate how much you will pay in interest based on your APR and loan terms.

Choosing a lender that has minimal or no fees can lower your costs. You can also reduce your overall cost by choosing the shortest term available. The tradeoff is that your monthly payments will be higher.

For example, a $20,000 loan with an annual percentage rate (APR) of 8.99 percent and a five-year term will cost more than a $20,000 loan with an APR of 12 percent and a three-year term. A longer term means your monthly payment will be lower, but the amount you pay in interest can be thousands of dollars more expensive.

Repayment term APR Monthly payment Interest paid Total cost
3 years 8.99% $636 $2,892.46 $22,892.46
5 years 8.99% $415 $4,904.20 $24,904.20
3 years 12% $664 $3,914.30 $23,914.30
5 years 12% $445 $6,693.34 $26,693.34

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

A $20,000 personal loan isn’t always the right choice. If you want to get a large personal loan, it will come with costs and debt to manage. However, it could be a beneficial choice in some cases.

Benefits of a $20,000 loan

Personal loans are smart for consolidating high-interest debt and funding home improvements.

  • Consolidating high-interest debt: If you have a large amount of credit card or other unsecured debt, a $20,000 debt consolidation loan can help you lower costs — if you qualify for a lower average interest rate.
  • Funding home improvements: Depending on the type of home improvements you make, taking out a $20,000 personal loan to cover the costs could help you increase the value of your home.

Drawbacks of 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 may be harder for you to qualify for future loans like a mortgage or an auto loan.

Alternatives to $20,000 personal loans

If you can’t get approved for funding and prefer to explore other options, consider these alternatives:

  • Home equity loan: A home equity loan is a second mortgage that allows you to convert a portion of your equity into cash. Rates are fixed and competitive, but you risk foreclosure if you fall behind on payments.
  • Credit card: With a credit card, you’ll only pay interest on the funds you borrow and fail to repay within the grace period. The minimum monthly payment is likely smaller than a personal loan’s would be. However, the average interest rate of 20.75 percent means you could get trapped under a heap of ever-growing debt.
  • Home equity line of credit (HELOC): HELOCs work like a credit card. You can access a revolving line of credit for a set period. The downside is that your home is used as collateral, so defaulting means it could be foreclosed.
  • Loans from relatives and friends: With an amount this large, this is a less-likely option. If you do find a friend or family willing to float you, be sure to get the agreement in writing. Only commit to terms you can uphold to preserve your relationships.

Bottom line

Taking out a $20,000 personal loan is a major financial decision. Before starting your search, figure out if you actually need to take out such a large loan. Then, estimate your borrowing costs to see how much you’ll spend over the life of the loan.

If you determine that it’s the right move, be sure to compare personal loan rates and terms from multiple lenders to get the best deal.