£25000 Loan

What is the best way to get a £25000 loan?

Whether you’re looking to take out a £25000 loan for home improvements, car purchase or debt consolidation, there are some different finance options you should be aware of before committing to a deal.

Generally, borrowers with £25000 loans tend to obtain the financing through either a secured loan or a personal loan. To get the best deal to suit your needs, it is important to shop around different providers and consider the different term lengths and interest rates available, as this will affect the cost of your repayments.

How much does a £25000 loan cost?

See below for a £25000 loan calculation over 5 years.

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Secured loan vs. personal loan

There is no right or wrong answer when it comes to choosing between a secured loan and a personal loan. Each loan will suit a borrower differently depending on their personal circumstances. 

Secured loans are obtained through securing the equity you own in an asset (usually your home) as collateral against the loan. Secured loans are usually favourable when looking to borrow large amounts of money; you can typically expect to borrow anything from £10,000 to £2.5m over a lengthy period of time.

A secured loan might also be preferable for those with bad credit ratings looking to borrow capital.

On the other hand, a personal loan tends to be more straightforward than other forms of finance.

As the loan is unsecured, you do not have to put an asset (such as your home) down as collateral against the loan. Personal loans are offered by the majority of banks and other lenders, and you can typically expect to borrow between £1,000 and £25,000 over a relatively short period of time (in comparison to a secured loan).

Although personal loans usually offer higher interest rates, borrowers tend to pay back a smaller total amount as the loan terms are shorter than secured loans.

How do I get a £25000 personal loan?

We all know that our financial obligations can be tough to manage now and then. 

Sometimes, we need a little extra help to tackle unexpected expenses, seize opportunities, or make important life changes. 

A personal loan is simply a type of loan provided by financial institutions, such as banks and credit unions, to individuals like you. For example, it’s intended for personal use rather than to bankroll a pre-existing business venture.  

Unlike loans, which are specifically designated with a particular purpose in mind, like a mortgage to buy a home or a car loan to purchase a vehicle, personal loans offer a great degree of flexibility in the amount of money you can borrow and how the cash can be used once you’ve received it. 

When you take out a personal loan, you’ll receive a lump sum of money, which you’re then expected to pay back over a fixed period of time, typically through monthly instalments paid directly to the lender you choose. 

The specific details of the loan such as the amount you borrow, the interest rate you’ll be charged, and the general repayment terms are determined based on a few factors which are considered by the lender prior to giving you approval.  

Your credit score, income stability, and behaviour regarding financial obligations all factor into the lender’s final decision. 

Use our loan calculator to see if you qualify for a £25000 loan.

Are there different types of personal loan? 

There are a couple of different ways to arrange a personal loan.  

Generally, they can either be secured or unsecured.  

A secured personal loan means you must provide the lender with collateral, such as a savings account, a car, or any other assets of value that the lender can seize if you default on the loan. 

Generally, to get a £25,000 secured loan, the value of the collateral would either have to match the sum of the loan or exceed it.  

The lender will assess the asset’s value before offering you any money, so you don’t need to worry about making an inaccurate guestimate and ending up in hot water later on. 

In contrast, an unsecured personal loan doesn’t require you to put up any collateral, but it often comes with a higher interest rate since the lender takes on more risk by lending you money, as there’s no security should things go wrong. 

To get an unsecured loan of £25,000, you’ll likely need to have a robust track record of excellent credit use and enough income to comfortably meet repayments whilst managing your day-to-day finances. 

As with any personal finance product, it’s important to carefully assess your financial situation and capacity for repayment before taking out a personal loan. 

Are there any alternatives to a personal loan? 

Alternative	Description
Credit Cards	If you’re looking for additional loans because you’re facing financial hardship, it’s prudent to contact your existing lenders to discuss potential payment plans or alternative arrangements. Many lenders on the market are more than willing to work with you to establish more manageable repayment terms to avoid you falling into further unnecessary debt. This can help avoid the need for taking on additional credit, saving you money on increased interest payments.
Home Equity Loans	Here’s one for the homeowners… If you have built-up equity in your property, home equity loans can provide you with a lump sum which is borrowed against the value of your home. These loans typically have lower interest rates than personal loans and can be drafted in to help you meet the cost of larger expenses like home improvements or debt consolidation.
Peer-to-Peer Lending	The internet has given us many great things, including online platforms which connect would-be borrowers directly with individual lenders who are willing to provide people with the loans they need. Peer-to-peer lending can offer competitive interest rates and terms in comparison to traditional borrowing, especially if you have a good credit score behind you. The lending process often involves a credit assessment before funds are disbursed. However, you’d have to undergo these for traditional lenders to lend you money too, so this option is worth exploring.
Government Assistance	Depending on your individual situation, you might qualify for government assistance programs or grants which can provide financial support without the need to bring in traditional loans. Before taking on a loan, it’s wise to research initiatives or benefits offered by government agencies or non-profit organisations which cater to your specific needs, be that education, housing, or giving your small business a boost.
Negotiating Payment Plans	If you’re looking for additional loans because you’re facing financial hardship, it’s prudent to contact your existing lenders to discuss potential payment plans or alternative arrangements. Many lenders on the market are more than willing to work with you to establish more manageable repayment terms to avoid you falling into further unnecessary debt. This can help avoid the need for additional credit, saving you money on increased interest payments.
Savings or Emergency Fund	If at all possible, utilising your own savings or emergency fund can be a smart alternative to borrowing more money that you may not need. By using your existing cash, you’ll avoid incurring any hefty interest charges and the potential burden of debt repayment further down the line.

Can I Get a £25000 Business Loan?

If you are a business owner sourcing finance is typically done on the trading record of the business. Lenders will look at your annual accounts and typically the last 3 months bank statements in assessing whether they will lend. Unsecured business loans will still often require a director of the business to provide a personal guarantee. Use our loan service to see if your business qualifies for a £25000 business loan. Repayment terms range from 3 months to 5 years.

Can I Get a £25000 Bridging Loan?

Bridging loans are secured on property, and most lenders in the UK will have a minimum loan size of £25,000, with many starting at £50,000. So for a bridging loan of £25,000 the short answer is this may be an option but it is important to look at other loan options for a sum of this size.

How do I get better rates on a £25000 loan? 

Unfortunately, sometimes the rates you’re offered on personal loan can be disappointing.  

This could be for several reasons, all of which can be mitigated by taking a few simple steps. 

There are a few foolproof strategies to improve your chances of securing better interest rates on a £25,000 loan in the UK. 

Maintain a good credit score 

When you apply for a loan, lenders assess your creditworthiness when determining the interest rate you’ll need to pay on top of the principal sum of cash you borrow.  

A higher credit score will mean a lower credit risk threshold for the lender. This, in turn, will usually lead to more favourable interest rates.  

To keep that credit score high, pay your bills on time, keep your overall credit utilisation low, and review your credit report on a regular basis to remove any errors or discrepancies you find lurking around. 

Shop around and compare loan offers 

No two lenders are the same. 

Different lending institutions on the market might offer varying interest rates and terms for the same loan amount, even if your financial background is broadly the same each time you apply.  

To make sure you’re making the most out of what’s out there, be sure to take the time to research and compare loan options from various financial institutions you can identify. 

By considering both traditional and digital lenders, you can make sure you explore a wide range of choices. 

Consider a secured loan

If you have any valuable assets at hand, such as a car or a house, you might be eligible to take out one of the secured loans we mentioned earlier.  A £25000 secured loan would sit as a second charge behind your first charge mortgage.

Since secured loans provide collateral to the lender which offers them a layer of welcomed security, they often come with better rates compared to their unsecured counterparts.  

However, be cautious with this option – defaulting on payments could result in the loss of the secured asset. 

Improve your debt-to-income ratio 

Lenders evaluate your overall debt-to-income ratio as part of their multi-step process to protect both you and them. 

This sounds complicated, but it’s actually pretty simple: this ratio compares your monthly debt payments to your net income.  

Lowering your level of existing debt or increasing your income a bit can improve this ratio over time rather substantially, and potentially lead to you being able to secure much better interest rates on future loans. 

Opt for a shorter loan term 

If you can manage it, choosing a shorter loan term might result in a lower interest rate.  

While this will increase the sum of your monthly payments, it can save you a lot of money in the long run by reducing the total interest which you need to pay over the loan’s duration. 

Consider a joint or guarantor loan 

If you have a trusted family member or friend on hand with a stronger credit profile than yours, you could weigh up the options of applying for the loan together or having them co-sign on it to give the lender a little bit of added security.  

Taking this simple action could potentially improve your chances of securing a better interest rate based on your superior level of creditworthiness. 

Provide a larger deposit  

If you’re using the loan you need for a specific purpose, like buying a car or carrying out a much-needed home improvement project, offering a larger deposit on your loan can reduce the sum of cash you need to actually borrow.  

A smaller loan amount may lead to more favourable interest rates being offered to you. 

Considerations before taking out a £25000 loan

Generally speaking, there is no right or wrong loan option when taking out a £25000 loan.

However, depending on your personal circumstances, some options are likely to be more suitable for your needs than others. Before committing to a loan we strongly recommend that you compare the market in looking at your loan options.

We provide a loan calculator on this site. For secured loans, business loans and bridging loans you should speak to a qualified loan broker who can evaluate your situation and provide you with unbiased, expert advice to make the right decision for you.