Are you looking to borrow £25,000?
The question is, with so many ways to borrow, how can you decide which method is right for you?
Well, good news—we’re here to help, with our complete guide to borrowing £25k. In this article, we’ll cover all of your options, along with the pros and cons, eligibility criteria, and credit score implications for each.
Where can I get a £25,000 loan?
When looking to borrow amounts between £10,000 and £50,000, there are a number of suitable loan types to choose from.
Generally speaking, you’re going to be looking at either an unsecured personal loan, or a secured homeowner loan when borrowing £25k.
Depending on what you’re looking to finance however, such as a car, you may also have finance options available for consideration.
Unsecured vs Secured Loans: Which is best for borrowing £25k?
There is no single “best” option, and the type of loan you prefer will depend on your individual needs and circumstances.
Unsecured personal loans
An unsecured loan, also known as a personal loan, allows you to borrow small-to-medium amounts over a short-to-medium term. The debt isn’t tied to any assets you own, and instead lenders use your credit history to determine your eligibility to borrow.
If you do not own a home, an unsecured loan will typically be your main borrowing option for an amount as high as £25,000. Other forms of borrowing, such as credit cards, may have lower and unsuitable credit limits for what you need.
A secured loan, otherwise known as a homeowner loan, is a form of borrowing through which the debt is secured against your property. As a result of this, lenders have more security, meaning they are willing to offer higher amounts or more favourable terms.
Because the debt is tied to your property, secured loan eligibility is less dependent on your credit history than it might be for unsecured loans.
It’s important to note that your home may be repossessed if you do not keep up with mortgage repayments, or any other debt secured on it.
Execution-only secured loans
An execution-only secured loan offers lower limits and shorter terms than a traditional secured loan, but with the added benefit that you don’t need to speak with an adviser.
This means it’s a secured loan that puts the control in your hands from start to finish, with no additional fees and no need for professional advice calls.
These can be preferable if you simply want to speed up the process.
As with secured loans, your home may be repossessed if you do not keep up repayments on a mortgage, or any other debt secured on it.
Which route is best for borrowing £25,000?
While there is no single “best” option, you may prefer specific types of borrowing depending on your circumstances:
- If you do not own your home, then an unsecured personal loan will likely be the most suitable option for you
- If you are a homeowner and want a longer loan term, with lower monthly payments, then a secured homeowner loan will provide that extra freedom
- If you are a homeowner and don’t mind a shorter loan term, or want to skip your advice call, then an execution-only secured loan could be an option to consider
Am I eligible?
Eligibility criteria will vary between lenders and depend on your individual application to borrow. However, there are some common areas that lenders will typically review when considering your loan application:
- Your credit history or credit score
- Your income
- Your debt to income ratio (the amount that you already pay towards debts)
- Loan purpose (such as buying a new car, or making home improvements)
If you want to check whether you are eligible, without impacting your credit score, simply head over to our free eligibility checker tool to review your details and browse suitable loan products from our lenders.
Can I get a £25,000 loan with a bad credit score?
Your credit score, otherwise known as your credit rating, is a representation of your past borrowing history. It’s used by lenders to evaluate your application and eligibility, essentially as a measure of how reliable you are when it comes to borrowing and repaying debts.
A high credit score will generally be a sign of a strong credit history, with plenty of examples of borrowing and repaying on-time. With a good credit score, lenders will be more likely to offer a higher amount, or more favourable terms.
A low credit score, on the other hand, might be a sign of missed repayments or additional charges being applied to past debts. As a result, lenders may only offer part of the amount requested, or apply a shorter loan term with a higher interest rate.
Having said that, a lower credit score doesn’t necessarily mean you cannot borrow £25k, in fact there are lenders that specifically design their loan products for people with low credit.
As a broker, we provide an unbiased view of a number of lenders, so that you can select one that best suits your needs. By entering a few details about yourself and what you’re looking for into our eligibility checker, you can compare lenders based on your circumstances, without any impact on your credit score.
Can I apply to borrow £25k online?
Yes—to apply for a £25,000 loan, simply head over to our eligibility checker and enter a few basic details about yourself and what you’re looking for.
We’ll then run a soft search on your credit history, meaning it won’t appear on—or impact—your credit report, and suggest lenders that fit your needs and circumstances.
It’s then simply a case of reviewing the options and, if you find one that appeals to you, making your application.
Lenders will then review your application, performing a hard check on your credit report, following which they will make a decision on whether or not to approve your application.
If your application is successful, the lender will send an offer, which will include the following details:
- The amount offered
- The loan term (how many years the loan will be repaid over)
- The interest rate applied
- The total amount repayable at the end of the term, including the interest
Take time to review this information in detail and ask yourself whether it meets your needs, or what you can realistically afford. There is absolutely no obligation to proceed, so allow yourself the freedom to consider what is going to be best for your goals.
If you are happy with the terms, you can accept the offer.
Will I receive my loan on the same day?
If you are applying for an unsecured loan, you will receive the funds as soon as the lender is able to process the transaction following your agreement to the contract. As a result, it’s fairly common for unsecured loans to be received on the day that they are approved.
With a secured loan, the process can take a little longer, as various documents relating to your property will need to be provided. However, you can help to speed up this process by having the documents prepared as soon as possible.
Can I afford to borrow £25,000?
Loan affordability is an important factor to consider before making a decision.
As outlined earlier in this guide, lenders that have approved an application will send an offer detailing the loan amount, repayment term, monthly repayments, and total repayable amount.
A useful technique for reviewing this can be to look into your personal finances:
- How much income do you receive each month?
- How much is paid out to fixed, recurring monthly costs, like rent or utility bills?
- Of the amount remaining, how much do you spend each month on groceries, personal expenses, or any other ways you spend in a typical month?
Once you have reviewed these mandatory monthly payments, subtract them from your total monthly income and review the amount left. Is this amount higher than the required monthly repayments for the loan?
If so, this is typically a sign that you will be able to afford it, based on your current living expenses. However, you know your finances better than anyone else, and it’s up to you to make an informed decision on what feels realistic and achievable.
It can also help to plan a backup, in the event that you lose your income unexpectedly. For example, do you have savings that could cover the monthly repayments if they needed to? Thinking about this in advance will give you a greater sense of security in the long-run.
What can I use my £25k loan for?
There are a wide variety of reasons why you might need to borrow £25,000, each with their own unique circumstances and things to consider.
For any borrowing need you have, you can find further details on the dedicated information pages below:
How do I repay the money I’ve borrowed?
Once you have received your £25k loan, you will be required to make repayments according to the loan agreement.
If you prefer, you can set up an automated bank transfer or standing order, scheduled for shortly after your payday, to ensure that you make the repayments on-time. This can help to avoid the risk of missing a repayment by accident, giving you one less thing to remember each month.
Once you have repaid the full loan amount, along with any interest and other fees applied, you should receive confirmation that your loan has been repaid. If not, it’s worth contacting the lender to confirm that your account has been closed.
Is a £25,000 loan right for me?
Ultimately, only you can decide whether a £25k loan is right for your needs. With the information covered in this guide, you should have everything you need to make that decision with confidence.
Of course, there has been a lot to consider, so let’s recap:
|Borrowing options||Unsecured loan, secured loan|
|Loan terms||1 to 30 years, depending on the type of loan.|
|Can you borrow with bad credit?||Yes, but may face higher interest rates|
|Can you apply online?||Yes, Aro makes it simple—unsecured loans can be applied for entirely online, whereas a secured loan will require a phone call|
|How quickly will you receive the loan?||Often within a day for unsecured loans, longer for secured loans|
|How do you repay the loan?||Over a series of monthly repayments, with interest|
Check your eligibility and start comparing £25,000 loans
Are you ready to borrow £25,000? Head over to our eligibility checker to see how much you’re able to borrow and find the right loan for your needs.