If you have a large upcoming expense, such as a big move, home renovation, or major medical cost, you may find yourself in need of more cash than you currently have sitting in the bank. The good news is that you may be able to get a personal loan for as much as $20,000. The interest you’ll pay on that loan, and how long you’ll have to pay it back, will depend on the lender, as well as your qualifications as a borrower.
Read on to learn when you might consider taking out a large personal loan, how to qualify for a $20,000 personal loan, and what monthly payments on a $20,000 personal loan may look like.
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Reasons to Consider a $20,000 Loan
The way personal loans work is that you borrow a lump sum of money that can then be used for almost any purpose. Here are some reasons why someone might consider taking out a personal loan for $20,000.
- Home improvement If you have costly home repairs that can no longer be ignored, or you’re planning a small remodel, you can use a personal loan for home improvement. Typically, this is a better option than using your credit card because interest rates are usually lower.
- Emergency funds If you suddenly get hit with high medical or funeral bills that would eat up all your savings, you can get a personal loan for emergencies. This can help you manage the costs while enabling you to keep some of your cash in reserve.
- Consolidating debt Instead of paying down multiple forms of debt with a variety of interest rates, you might want to roll all of your debts into one loan. Doing this can potentially lower your interest rate and/or monthly payment. It also reduces the number of bills you have to pay every month.
- Wedding costs Some young couples will charge wedding expenses on their credit cards, but this typically isn’t the best financing option. Credit card interest rates are usually much higher than personal loan interest rates.
- Moving costs Whether it’s across the country or just across town, moving can be a costly endeavor. You can use a large personal loan to cover the costs of moving supplies, real estate commission/fees, renting a truck, hiring a moving company, and/or purchasing items and furniture you need to set up your place.
- Vacation costs If you want to take your family on an unforgettable trip but don’t have the funds, a personal loan could make your traveling dreams a reality — assuming you can comfortably afford the monthly loan payments.
- New appliances One new high-end appliance can run over $1,000. If you need to replace a number of major appliances, and possibly also update the electrical system in your home, a personal loan of $20,000 could be useful.
Typical $20,000 Loan Terms
Personal loans for $20,000 are available through banks, credit unions, and online lenders. Here’s what you need to know about rates and terms.
Average Interest Rates
Personal loan interest rates currently run anywhere from 4% to 36%. The rate you’ll actually pay on a $20,000 personal loan will depend on the following factors.
- Credit score
- Debt-to-income
- Income
- Credit history
- Collateral (if choosing a secured loan)
- Type of interest – fixed or variable
- Lender
To find the best deal, it’s a good idea to shop around and compare personal loan rates from multiple lenders. Many lenders allow you to get prequalified with just a soft credit check, which won’t hurt your credit. While the prequalified rate is not a guarantee, doing this with multiple lenders can give you a good sense of what interest rate you’ll pay for a $20,000 personal loan.
Typical Repayment Terms
Most lenders offering $20,000 personal loans will offer repayment periods between three and five years. Shorter repayment periods typically come with higher monthly payments but less total interest. For longer repayment periods, the opposite is true. Going with a five-year loan term can make your monthly payments more manageable, but you’ll pay more in interest overall for the loan.
Typical Credit Score Requirements
Personal loan rates are, in large part, determined by your credit score. The chart below shows the average interest rate for a personal loan based on your credit score (as of April 2022).
$20,000 Personal Loan Monthly Payments
The monthly payment for a $20,000 personal loan largely revolves around two factors:
- Repayment term This is how long you will have to repay the loan. It’s usually a good idea to go with the shortest term you can afford to keep your interest costs as low as possible. Example One: A five-year repayment term with a 15% annual percentage rate (APR) would make the monthly payments $476. The total amount of interest paid would be $8,547.92. Example Two: A three-year repayment term with a 15% APR would make the monthly payments $693. The total amount of interest paid would be $4,959.04. Thus, the three-year term will cost $3,588.88 less than the five-year term.
- Interest rate Your interest rate will determine how much money the bank makes on your loan. Just remember that an origination fee (sometimes called an administration fee) may be added to your interest rate. Therefore, to calculate the true total cost of the loan, you’ll need to know its APR, which includes both the interest rate and any fees. Looking at APRs for personal loans also allows you to compare rates apples-to-apples.
Once you know a loan’s APR and the term of the loan, you can use an online loan calculator to figure out what your monthly payments will be. If the payments are more than you can afford, you might try plugging in a lower loan amount. Smaller loans, such as a $2,000 personal loan, will come with a lower monthly payment.
Qualifying Criteria for a $20,000 Loan
To qualify for a $20,000 loan, you will typically need:
- A strong credit score For an easy loan application process, you will want a credit score that is considered “good” (690-719). You can find personal loans for bad credit on the market, but interest rates will typically be higher. If your score is currently fair or poor, you can take steps to improve your credit score. However, it will take some time to see results.
- A steady source of income For each loan amount, lenders have minimum income requirements. This is to make sure you won’t have difficulty coming up with your monthly loan payments. You will need to verify your income with pay stubs, tax returns, and bank statements.
- Collateral This is an asset (such as cash, stocks, a car, or a home) that you put up for the loan. If you become unable to repay the loan in full, the lender can seize that asset in order to recoup its losses. You will only need collateral if you take out a secured loan. Since there’s less risk involved for the lender, collateralized personal loans typically come with lower interest rates than unsecured loans.
- Low debt-to-income (DTI) ratio: Your DTI ratio is the percentage of your gross (pre-tax) monthly income that is used to pay your total monthly debts. The highest DTI most lenders typically like to see is 43%. To calculate your DTI, add up your monthly debts from loans, mortgages, and credit cards and divide that amount by your gross monthly income.
Top $20,000 Personal Loan Lenders
We chose our top $20,000 personal loan lenders based on a Google search of “best personal loan lenders” in June 2022.
View Personal Loan Rates
If you’re interested in taking out a $20,000 personal loan, keep in mind that rates and terms can vary significantly from one lender to another. To get the best possible deal, you’ll want to shop around and compare offers from several different lenders. You can do this by prequalifying on a lender’s website.
Learn More:
This article originally appeared on LanternCredit.com and was syndicated by MediaFeed.org.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)
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What happens to your personal loans when you die?
What happens to personal loans when the borrower dies? This answer may not be as straightforward as you might think.
Here’s some context. In this post, the term “personal loans” goes beyond the type of installment loan known as a “personal loan” and encompasses loans taken out by a person or people rather than by businesses. It is a complex subject with laws varying by state.
According to the Federal Trade Commission, debts do not in general go away because the debt holder has died. Typically, the debts are paid from the estate of the deceased person.
An estate includes the person’s real estate, cash, financial investments, vehicles and other assets. If there isn’t enough money in the estate, the debts often go unpaid although there are exceptions where someone else is personally responsible for the debt.
Related: Can you use your spouse’s income for a personal loan?
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If someone has a will, it should list an executor. The executor is responsible for paying the deceased person’s debts out of the assets in their estate among other duties. If there isn’t a will, the court may appoint someone as executor or state law may contain a process in which someone becomes responsible for debt settling.
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State laws vary on how debt payments must be prioritized. Most commonly, funeral expenses are first, followed by estate administration costs and then taxes and medical bills. It’s important to seek guidance about state laws where the deceased person lived.
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In community property states, a spouse may be personally responsible for outstanding debts and, in some states, other laws exist that make a spouse responsible for certain types of debts, such as healthcare expenses.
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People who can inherit debt include the following.
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If you cosigned for someone’s debt and that person dies, you are typically responsible for that debt. This is not usually the case if you’re an authorized user on an account, such as a credit card.
If a debt collector tells you that you were a cosigner, but you believe that you were an authorized user only, the Consumer Financial Protection Bureau notes that you can ask the debt collector for evidence.
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The situation for jointly held debt owners is similar to that for cosigners. If you were on a joint account with someone who passed away, you remain an account holder and will likely be responsible for debt payments.
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If you were in a position where you were legally responsible for handling the debt, such as an estate’s executor and you didn’t follow proper procedures, you might find yourself legally obligated to pay the debt.
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As noted, spouses living in community property states may be required to pay off a deceased spouse’s debts through commonly held assets. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin—and Alaska, if spouses chose this method of property owning.
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The type of debt can play a role in how it’s handled. Loan types include the following.
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Cosigners and joint credit card holders will almost certainly be held responsible for credit card debt. If the deceased person had an individual account, then it would largely depend upon whether they lived in a community property state or not.
In a community property state, credit card debt is considered to be jointly held. In common law property states, the debt shouldn’t typically pass on to someone else.
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First, some context: Mortgages typically have a due on sale clause that means the loan must be paid in full before ownership can change hands; this isn’t applicable, though, if it’s transferred to an heir after a borrower’s death. (As with other kinds of debt, cosigners and co-borrowers would still owe the debt.)
If someone else inherits the house and is not a cosigner or co-borrower, then federal law allows the beneficiary to take over the mortgage—and the mortgage servicer must allow that, even if the person would not typically qualify for that mortgage loan.
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If someone inherits a home where there is a balance on a home equity loan, that debt is typically inherited, as well. If multiple heirs each inherit a share of the home, the situation becomes more complicated and you may want to get legal advice, especially if there is disagreement among heirs about how to proceed.
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In general, the deceased’s estate will pay for medical bills with exceptions, including when there is a cosigner or it’s a community property state. More than half of the states also have something called filial responsibility laws. This means that adult children can be held responsible for supporting their parents who can’t afford to support themselves. This law is rarely enforced but is worth noting.
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Car loans should generally be paid off by the estate. If there aren’t enough funds (and there’s no co-signer and it’s outside of a community property state), then the person inheriting the vehicle can make payments. If that doesn’t happen, then the lender may repossess the vehicle, sell it, and return any excess funds over the outstanding loan amount to the estate.
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Federal student loans will be discharged (considered paid in full) on the date of the borrower’s death. This applies to federal loans taken out by the student as well as parent PLUS loans taken out by a student’s parent.
Private lenders, however, are not legally required to cancel student loans upon death, so the executor should check the agreement to see what terms and conditions are.
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Personal loans also pass onto the estate where they can be paid through the deceased person’s assets. Cosigners/co-borrowers/spouses in a community property state can still be liable for that debt. (Here’s more information about what a personal loan is and the different types of personal loans.)
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In this section, we’re once again using the term “personal loans” to mean a non-business debt, which may or may not be a personal loan as the phrase is typically used.
If the debt is on record, meaning that there is a contract involved, the borrower would typically still owe the money. It would become an asset in the deceased person’s estate and there could still be consequences for the borrower if the debt is not paid.
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You can ask to see a copy of the contract, which would allow you to see the specifics of a loan agreement.
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If a transfer of money occurs with the expectation of repayment, that is considered a loan that should be paid back. If there is a question about whether something was intended as a loan or as a gift, from a legal standpoint, there should be evidence that can be presented to show that it was a loan. If there isn’t enough evidence, the court will often consider it a gift.
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Why get a personal loan? There are plenty of reasons to apply for a personal loan, including to pay legal expenses associated with estate planning. These loans can be unsecured or secured (collateralized loans). If it’s the latter, here’s what can be used as collateral for a personal loan. These installment loans come with a specified interest rate and term with payments calculated so that you pay it off in full during the loan’s term. If you find that you didn’t need as long of a term, here’s information about paying personal loans early.
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In general, when a borrower dies, the situation is handled through the person’s estate, with cosigners, co-borrowers and spouses in community property states having responsibility for most kinds of debts. When a lender dies, the borrower typically still owes the money. Individual situations can become quite complex, so it makes sense to reach out for legal help
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You can compare rates for personal loans at Lantern by SoFi.
Learn More:
This article
originally appeared on LanternCredit.comand was
syndicated by MediaFeed.org.
The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Lantern by SoFi:
This Lantern website is owned by SoFi Lending Corp., a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license number 6054612; NMLS number 1121636. (www.nmlsconsumeraccess.org)
All rates, fees, and terms are presented without guarantee and are subject to change pursuant to each provider’s discretion. There is no guarantee you will be approved or qualify for the advertised rates, fees, or terms presented. The actual terms you may receive depends on the things like benefits requested, your credit score, usage, history and other factors.
*Check your rate: To check the rates and terms you qualify for, Lantern and/or its network lenders conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender(s) you choose will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
All loan terms, including interest rate, and Annual Percentage Rate (APR), and monthly payments shown on this website are from lenders and are estimates based upon the limited information you provided and are for information purposes only. Estimated APR includes all applicable fees as required under the Truth in Lending Act. The actual loan terms you receive, including APR, will depend on the lender you select, their underwriting criteria, and your personal financial factors. The loan terms and rates presented are provided by the lenders and not by SoFi Lending Corp. or Lantern. Please review each lender’s Terms and Conditions for additional details.
Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit (https://www.consumer.ftc.gov/topics/credit-and-loans)
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Personal Loan:
SoFi Lending Corp. (“SoFi”) operates this Personal Loan product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lenders/partners receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.
Personal loan offers provided to customers on Lantern do not exceed 35.99% APR. An example of total amount paid on a personal loan of $10,000 for a term of 36 months at a rate of 10% would be equivalent to $11,616.12 over the 36 month life of the loan.
Student Loan Refinance:
SoFi Lending Corp. (“SoFi”) operates this Student Loan Refinance product in cooperation with Even Financial Corp. (“Even”). If you submit a loan inquiry, SoFi will deliver your information to Even, and Even will deliver to its network of lenders/partners to review to determine if you are eligible for pre-qualified or pre-approved offers. The lender’s receiving your information will also obtain your credit information from a credit reporting agency. If you meet one or more lender’s and/or partner’s conditions for eligibility, pre-qualified and pre-approved offers from one or more lenders/partners will be presented to you here on the Lantern website. More information about Even, the process, and its lenders/partners is described on the loan inquiry form you will reach by visiting our Personal Loans page as well as our Student Loan Refinance page. Click to learn more about Even’s Licenses and Disclosures, Terms of Service, and Privacy Policy.
Student loan refinance loans offered through Lantern are private loans and do not have the debt forgiveness or repayment options that the federal loan program offers, or that may become available, including Income Based Repayment or Income Contingent Repayment or Pay as you Earn (PAYE).
Notice: Recent legislative changes have suspended all federal student loan payments and waived interest charges on federally held loans until 05/01/22. Please carefully consider these changes before refinancing federally held loans, as in doing so you will no longer qualify for these changes or other future benefits applicable to federally held loans.
Auto Loan Refinance:
Automobile refinancing loan information presented on this Lantern website is from Caribou. Auto loan refinance information presented on this Lantern site is indicative and subject to you fulfilling the lender’s requirements, including: you must meet the lender’s credit standards, the loan amount must be at least $10,000, and the vehicle is no more than 10 years old with odometer reading of no more than 125,000 miles. Loan rates and terms as presented on this Lantern site are subject to change when you reach the lender and may depend on your creditworthiness. Additional terms and conditions may apply and all terms may vary by your state of residence.
Secured Lending Disclosure:
Terms, conditions, state restrictions, and minimum loan amounts apply. Before you apply for a secured loan, we encourage you to carefully consider whether this loan type is the right choice for you. If you can’t make your payments on a secured personal loan, you could end up losing the assets you provided for collateral. Not all applicants will qualify for larger loan amounts or most favorable loan terms. Loan approval and actual loan terms depend on the ability to meet underwriting requirements (including, but not limited to, a responsible credit history, sufficient income after monthly expenses, and availability of collateral) that will vary by lender.
Life Insurance:
Information about insurance is provided on Lantern by SoFi Life Insurance Agency, LLC. Click here to view our licenses.
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