A $20,000 personal loan gives you access to extra funds which you can use at your discretion. This can take the form of expenses such as holidays, weddings, a car, medical bills, small renovations and, in some cases, debt consolidation. To find out if a personal loan will work for you, here’s what you need to know about $20,000 personal loans.
What are $20,000 personal loans?
Personal loans are secured or unsecured amounts of money which are borrowed from lenders like banks, credit unions or peer-to-peer lenders. Think of a personal loan as a general purpose loan which is paid back over an agreed timeframe with interest. Personal loans usually have lower interest rates than credit cards, which make this type of loan a more cost-effective way to borrow a fixed amount of money.
The amount you can borrow for a personal loan depends on the lender as well as how much you earn and what your credit rating looks like. Personal loans commonly range between $1,000 to $50,000 for periods from one to 10 years.
Secured vs unsecured $20,000 personal loans
When it comes to $20,000 personal loans, there are generally two types of loans available: secured and unsecured.
A secured personal loan uses an asset like your house or car as security against the loan. The upside of putting your assets on the line is that your $20,000 personal loan will attract a lower interest rate. The potential downside is that if you default on your personal loan repayments, the lender could seize your assets.
On the other hand, if you don’t have any major assets, you can opt for an unsecured personal loan. This means that the lender will agree to lend you a sum of money without putting your assets as a guarantee. Because the lender is taking a bigger risk, unsecured personal loans tend to have higher fees and interest rates.
What should I look for in a $20,000 personal loan?
Before you apply for a $20,000 personal loan, you’ll want to research and compare the different types of personal loans on the market. Here are some things to consider:
Personal loan interest rate
You can get a $20,000 personal loan on both a fixed or variable interest rate. A fixed interest rate makes budgeting easier because your interest rate will remain the same over the life of the loan. On the flip side, a variable interest rate gives you flexibility if rates go down and will often have lower fees than fixed-rate personal loans.
Personal loan fees and charges
Before you apply for a personal loan, compare loan costs like establishment fees, monthly fees and annual fees. Some loans have charges for making additional repayments or paying off your loan early.
Personal loan redraw facility
A personal loan redraw facility can help with those unexpected bills by redrawing repayments you’ve already made on the loan. Be mindful that redrawing money from your personal loan will push your balance back up.
Look for a personal loan that matches your pay cycle. If you’re paid fortnightly, try to align your loan repayments to match. If you pay monthly, you’re making 12 repayments each year. If you switch to fortnightly you’re making 26 repayments which will actually help you pay your loan off faster.
Before you apply for a $20,000 personal loan, it pays to do your research. Work out what features you need and what repayments you can afford to make on your personal loan. Click here to compare $20,000 personal loan options.