A $20,000 personal loan is a flexible way to access funds for a wide range of purposes, with repayments spread over time to suit your budget. Whether you’re covering an unexpected expense, funding a project or planning a special event, it can help you manage the cost without disrupting your finances.
What can I use my $20,000 personal loan for?
A personal loan is a flexible product, meaning you can use your $20,000 for a variety of purposes. This can include:
- Debt consolidation: combine multiple high-interest debts into a single loan, potentially lowering your repayments and simplifying your finances.
- Home renovations: fund renovations or improvements around your home, from updating a kitchen to refreshing your bathroom.
- Legal fees: use a loan to cover unexpected legal costs such as family law matters, conveyancing or other legal services.
- Medical purposes: pay for elective procedures, dental work or other medical expenses not covered by insurance.
- Wedding: fund your wedding celebrations including the venue, catering and other costs for a memorable day.
- Travel: finance a holiday, honeymoon or gap year adventure without exhausting your savings.
If you’re hoping to borrow $20,000 solely for an asset like a vehicle then you’re better off to go down the route of taking out a secured car loan, caravan loan or other relevant dedicated finance.
How much will my $20,000 personal loan cost?
The total cost of your $20,000 personal loan will depend on several factors, namely the interest rate you get, fees and the length of your repayment term.
Interest rate
The interest rate you receive has the biggest impact on the total cost of your loan – and even a small difference can significantly affect how much you pay overall. The table below shows how different interest rates can affect the cost of a four-year, $20,000 loan:
| Interest rate | Monthly repayment | Total interest | Total cost of loan |
|---|---|---|---|
| 6.0% p.a. | $470 | $2,546 | $22,546 |
| 6.25% p.a. | $472 | $2,656 | $22,656 |
| 6.75% p.a. | $477 | $2,877 | $22,877 |
| 7.5% p.a. | $484 | $3,212 | $23,212 |
| 8.0% p.a. | $488 | $3,436 | $23,436 |
| Calculations are for illustrative purposes only. Interest rates may not be reflective of the rate you’re offered on your personal loan. | |||
While the monthly repayment difference is small – only $18 more per month for an 8% loan compared with a 6% loan – the total cost difference is significant, adding $890 over the four-year term.
The rate you’re offered will depend on a variety of factors in your personal financial profile, including your credit score and income, as well as whether the loan is secured or unsecured (secured loans usually have lower rates) and the lender you choose.
Fees and charges
When applying for a loan, it’s important to look beyond the interest rate and consider any fees or charges that come with it, as these can significantly increase the overall cost. The loan with the lowest rate isn’t always the cheapest once fees are factored in.
To get a clearer idea of what you’ll actually pay, you should check the comparison rate, which includes both interest and standard fees, giving a more realistic picture of your loan’s true cost.
Common fees may include establishment and monthly service fees, and some lenders may also charge for making extra repayments or paying off your loan early.
Let’s look at an example of a $20,000 loan repaid over five years:
| Interest rate | Comparison rate | Total cost of loan | |
|---|---|---|---|
| Loan A | 6.0% p.a. | 7.7% p.a. | $24,111 |
| Loan B | 6.5% p.a. | 7.4% p.a. | $23,942 |
| Calculations are for illustrative purposes only. Interest and comparison rates may not be reflective of the rate you’re offered on your personal loan. | |||
While Loan A has a lower interest rate, its higher fees make it more expensive overall – showing why it’s essential to look beyond the rate when comparing personal loans.
Repayment period
The longer you take to repay your $20,000 loan, the more interest you’ll pay overall – increasing the total cost of your loan. Here’s how this could vary for a loan with a 5.85% p.a. interest rate over different loan terms:
| Loan term | Monthly repayment | Total interest | Total cost of loan |
|---|---|---|---|
| 1 year | $1,720 | $639 | $20,639 |
| 3 years | $607 | $1,855 | $21,855 |
| 5 years | $385 | $3,116 | $23,116 |
| 7 years | $291 | $4,422 | $24,422 |
| Calculations are for illustrative purposes only. Interest rate may not be reflective of the rate you’re offered on your personal loan. | |||
Shorter loan terms may mean higher monthly repayments, but you can save thousands in interest if you’re able to the cost.
Personal Loan Repayment Calculator
It’s important to have an idea of what your loan might cost you overall before you apply. Fortunately, Savvy’s personal loan calculator is simple to use and lets you know how much your repayments could be.
Your estimated repayments
$98.62
| Total interest paid: | Total amount to pay: |
| $1233.43 | $5,143.99 |
Why apply for a personal loan with Savvy?
How to apply for a $20,000 personal loan with Savvy
-
Apply online
Fill out our quick online form to request your $20,000 loan.
-
Provide your documents
Upload the required documents securely through our online portal.
-
Speak to a Savvy broker
One of our team members will call to discuss your personal loan options.
-
Submit your application
Your broker will prepare and submit your application to your chosen lender.
-
Receive your funds
Once approved, we’ll handle settlement and your $20,000 loan will be transferred to you.
Tips for getting your $20,000 personal loan approved
-
Meet the eligibility criteria
Before you apply, it’s important to ensure you meet the lender’s eligibility criteria – especially as any rejections can impact your credit score.
-
Check your credit score
Knowing your credit score helps you understand your borrowing options and allows you to address any issues that might affect approval.
-
Earn a steady income
Lenders won’t only look at your credit history – they’ll also want to see that you have a reliable income to comfortably cover repayments.
-
Reduce existing debts
Lowering your current debts can improve your debt-to-income ratio, showing lenders that you can manage repayments responsibly and increasing your chances of approval.
-
Have your documentation ready
Being prepared with documents like payslips, bank statements and ID can speed up the application process and reduce delays.
