How to get a $20,000 personal loan

A variety of loan options are available, but your credit score is a deciding factor. (iStock)

If you need to borrow a significant amount of money, you can typically get it in the form of a personal loan from a bank, credit union or online lender. Depending on your financial and credit situation, though, your options may be limited or too expensive to be worth it.

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The application process for a personal loan is typically simple and quick. But there are some steps you should take before you even make the decision to apply.

Here’s how to get a loan and what to consider before you apply.

1. Check your credit score and report

If you have a FICO credit score of 670 or higher, you may have a good shot at a loan with favorable rates and terms. While it’s possible to get approved with a credit score lower than that, it could get expensive. Many mainstream lenders charge as high as 36 percent.


If your score needs some work, get a copy of your credit report through to determine which areas you need to address. This may include disputing inaccurate or fraudulent information to the credit bureaus.

2. Learn how to get preapproved for a loan

Many lenders allow you to get preapproved for a personal loan before you apply. This process requires a soft credit check, which won’t hurt your credit score. The result is a conditional rate offer based on the limited credit information the lender received—you’ll get a final offer after you apply.

Getting preapproved for a loan with multiple lenders allows you to compare rates, repayment terms, fees and other features that could affect how much you pay and your loan experience. Try to focus on unsecured loans, which don’t require any collateral to get approved.

3. Consider your own bank or credit union

If you’re already a customer of a bank or credit union, your relationship may help you qualify for better terms than what you can find elsewhere. Also, note that credit unions legally can’t charge interest rates higher than 18 percent on most personal loans.

4. Look into alternatives

You can use a personal loan for just about anything, but another loan type may be a better fit for your needs. For example, some credit cards offer 0% APR promotions on purchases and balance transfers, which can save you money.


If you own a home, a home equity loan or line of credit could save you money on interest—though they also present the danger of losing your home if you can’t repay the debt. And if you’re looking to fund a business, a business loan may provide better terms for your situation.

Also, consider whether you need to borrow money at all. It may be better for your financial health to save up for your expenses.

5. Get your paperwork together and apply

During the application process, you may be asked to provide various documents, including:

  • Photo ID
  • Proof of income (pay stubs, W2 form, tax returns or bank statements)
  • Other financial statements
  • Proof of residence (lease agreement, mortgage statement or utility bill)

Once you have these documents, apply with the lender that provides the best terms for your situation. Make sure you understand the terms before you accept the loan, then create a plan to pay it back on time.

The bottom line

If you’re wondering how to get a loan, the process is relatively simple. But depending on your situation, it may be difficult or even impossible to borrow affordably. Take these steps to determine whether getting a loan is the right decision for you and what your options are based on your situation.

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