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.

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.

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:

APR range Loan amount range Minimum credit score requirement
Avant 9.95%-35.99% $2,000 to $35,000 550
SoFi 8.99%-29.49%* with Autopay $5,000 to $100,000 680
LightStream 8.89%-24.29%* with Autopay $5,000 to $100,000 695
TD Bank 8.99%-23.99% $2,000 to $50,000 700


Avant specializes in offering unsecured personal loans to borrowers who have fair and  less-than-stellar credit scores. If you qualify, your funds can be deposited into your bank account as soon as the next business day. The downside, however, is that Avant’s advertised rates are on the high side— they range from 9.95% to 35.99%.


SoFi offers a wide range of loan amounts, has competitive interest rates and has optional fees. Its loan amounts range from $5,000 to $100,000; interest rates range from 8.99% to 29.49% (with Autopay). To qualify, you’ll need good credit and a decent income. The minimum credit score requirement is 680.


LightStream offers a wide range of repayment terms and loan amounts from $5,000 to $100,000 and offers a low minimum interest rate of 8.89% (with Autopay) to well-qualified applicants. Repayment terms range from two to 7 years for most loans; and two to 20 months for home improvement loans, swimming pool loans and solar loans. If you need a large loan for those purposes, you can enjoy lower monthly payments.

TD Bank

TD bank offers personal loan amounts ranging from $2,000 to $25,000 without origination fees, prepayment penalties or application fees. It offers competitive interest rates that range from 8.99% to 23.99%. If you qualify, you can get loan funds deposited into your account as quick as one business day. However, a major drawback is that loans are only available in 15 states.

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

Your overall borrowing costs depend on several factors, such as your interest rate, repayment term and any fees the lender charges. Common personal loan fees include origination fees, prepayment penalties and late payment fees.

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

For example, say you take out a $20,000 personal loan at 8% and a three-year loan term. In that case, your monthly payment would be $627, and your total borrowing cost would be $22,562.18.

By contrast, your total costs would be more for a $20,000 personal loan with the same interest rate but a five-year loan term. Although your monthly payments would be lower —  $406, your total borrowing costs would be higher — $24,331.67.

To estimate your total borrowing costs, use Bankrate’s personal loan calculator.

Bottom line

Taking out a $20,000 personal loan is a major financial decision. Before you move forward, first 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.