Whether you’re looking to take out a £25000 loan for home improvements, car purchase or debt consolidation; there are a number of different finance options that you should be aware of before committing to a deal.
Generally, borrowers of £25000 loans tend to obtain the finance through either a secured loan or a personal loan. In order to get the best deal to suit your individual needs, it is important to shop around different providers and to 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
This will depend on your circumstances, but assuming you have an excellent credit score then you should qualify for a top of the market personal loan rate.
5 year term
Interest rate: 3.7%
Monthly repayments: £457.04
Total cost of credit: £2,422.17
Total loan repayment: £27,422.17
Calculations are based on the interest rate being fixed over the term and no repayments are missed.
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 that 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.
A personal loan on the other hand tends to be more straightforward than other forms of finance.
As the loan is unsecured, it does not require you 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 you are usually offered higher interest rates with personal loans, you tend to pay back a smaller amount in total as the loan terms tend to be shorter than secured loans.