How to get a £5000 loan

If you’re looking to take out a £5000 loan, you have a wide range of funding options available.

Sorting through different loans and figuring out what’s right for you can often be overwhelming. Most customers who take out a £5000 loan tend to take a personal loan.

Applying for a loan is straightforward and will vary depending on the lender selected. There are many well-known brands that offer unsecured personal loans; however, what you will be offered will depend on your circumstances and credit status.

How much does a £5000 loan cost

This will depend on your circumstances, but assuming you have an excellent credit score then you should qualify for a market leading personal loan rate.

Loan Repayment Example

Repayment Example for a £5,000 Loan

Let’s work through the example of a loan of £5,000 taken out over 5 years (60 months) with an annual APR of 12.5%. We’ll determine the monthly repayments, including both capital and interest.

Loan Details

  • Loan amount: £5,000
  • Annual Percentage Rate (APR): 12.5%
  • Loan term: 5 years (60 months)

Steps to Calculate Monthly Repayments

  1. Convert the annual interest rate to a monthly interest rate:

    \( r = \frac{12.5\%}{12 \times 100} = \frac{0.125}{12} \approx 0.01042 \)

  2. Determine the number of monthly payments:

    \( n = 5 \times 12 = 60 \)

  3. Plug the values into the formula:

    \( M = P \frac{r (1 + r)^n}{(1 + r)^n – 1} \)

    Where:

    • \( M \) is the monthly repayment
    • \( P \) is the loan principal (initial amount)
    • \( r \) is the monthly interest rate (annual rate divided by 12)
    • \( n \) is the number of payments (loan term in months)
  4. Calculate step-by-step:
    1. \( (1 + r)^n = (1 + 0.01042)^{60} \approx 1.8194 \)
    2. \( r (1 + r)^n = 0.01042 \times 1.8194 \approx 0.01896 \)
    3. \( (1 + r)^n – 1 = 1.8194 – 1 = 0.8194 \)
    4. \( M = 5000 \times \frac{0.01896}{0.8194} \approx 5000 \times 0.02314 \approx 115.70 \)

Monthly Repayment

The monthly repayment is approximately £115.70.

Summary

If you take out a loan of £5,000 over 5 years with an APR of 12.5%, your monthly repayment would be approximately £115.70. This amount includes both the repayment of the loan principal and the interest. Over the 5-year period, you will make a total of 60 payments.

Loan Calculator »

Calculations are based on the fixed interest rate over the term, and no repayments are missed. 

Please note that many lenders typically will apply their best loan rates for loans between £7,500 and £25,000, and lower loan amounts, you will pay a higher interest rate. If you opt for a loan term of less than 5 years, the interest rate may also be higher.

How to get a £5000 Personal Loan

A personal loan 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). Use our loan calculator to find the best deal currently for a £5000 loan.

Personal loans can be taken out for a variety of different reasons, and lenders tend to specialise packages depending on whether you wish to use the loan for home improvements, car purchases, debt consolidation etc.

The loan term will depend on the lender. Some unsecured lenders only offer personal loan terms from 1 to 5 years.

Use our loan calculator to help you find an online loan. Most lenders offer a fixed rate for the loan term, so your monthly payments will not change.

How to get a £5000 Homeowner Loan

A secured loan or homeowner loan (also known as a second-charge loan) is a loan that you take out with a particular asset of yours (usually your home) put up as security.

As a result, legally speaking, the creditor from whom you are borrowing the money will retain legal ownership of the asset in question until you repay the loan.

Secured loans can be used for almost all legal purposes.

As secured loans tend to have larger borrowing amounts and longer repayment terms, secured loans are commonly used to carry out home improvements, home extensions and debt consolidation.

You might also wish to consider other types of borrowing besides personal and home owner loans, such as authorised overdrafts and credit cards.

A homeowner loan application will consider your credit history, so the loan you will be accepted for may depend on this. If you are taking out a loan in joint names, then your partner’s credit rating will come into play.

Can I Get a £5000 Business Loan?

If you are a business owner, sourcing finance is typically done on the trading record of the business. Lenders will look at your annual accounts and typically the last 3 to 6 months’ bank statements in assessing whether they will lend. Unsecured business loans still often require a business director to provide a personal guarantee. Use our loan service to see if your business qualifies for a £5000 unsecured business loan. Repayment terms range from 3 months to 5 years.

Can I Get a £5,000 Bridging Loan?

Bridging loans are secured on property, and most lenders in the UK have a minimum loan size of £25,000, with many starting at £50,000. So, for a bridging loan of £5,000, this will not be an option for you.

Considerations before taking out a £5000 loan

It is important to consider your options carefully when taking out a £5000 loan.

Depending on your personal circumstances, some options are likely to be more suitable for your needs than others. Before committing to a loan, we strongly recommend that you compare the market.

We provide a loan calculator on this site. For secured loans, business loans, and bridging loans, you should speak to a qualified loan broker who can evaluate your situation and provide you with unbiased, expert advice to make the right decision.