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Table of Contents
- What to consider when choosing a £10,000 loan
- Taking a £10,000 loan over different loan terms
- What can you use a £10,000 loan for?
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- Different types of £10,000 loan
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- Can you get a £10,000 loan for bad credit?
- £10,000 loan: am I eligible?
- How to apply for a £10,000 loan
- Will a £10,000 loan affect my credit score?
- £10,000 loan FAQs
What to consider when choosing a £10,000 loan
A £10,000 loan could help fund a large cost such as a wedding or home renovation. It’s a large loan amount, so make sure that a personal loan is the right option for you and that you are only borrowing what you need. If your circumstances change and you’re not able to keep up with your repayments, a large debt could build quickly and your credit score will be damaged.
You’ll want to make sure you’re getting the best interest rate possible for your financial situation and credit history. Your loan rate can make a big difference to your monthly repayments and the overall cost of the loan.
Checking your eligibility and credit score before applying for a loan shows you the likelihood of your application being accepted, which helps to limit the number of applications you make. Making multiple applications for credit over a short time can damage your credit score.
The lender may be able to tell you the rate you’re likely to receive before you apply, but the lender’s final decision will come when you apply properly.
Here’s what else to consider when comparing £10,000 loans:
Annual Percentage Rate (APR)
The APR helps you to compare loans by illustrating the yearly cost of borrowing money, including the interest rate and any standard fees. The representative APR that lenders are required to show you is the rate 51% of applicants can expect to receive.
This doesn’t necessarily mean that the APR you receive will be the same as the representative APR. It could be the same, or higher or lower.
The loan amount and term you choose can influence the rate you receive.
If you have a good credit history, you’re more likely to receive the best rates for a £10,000 loan. When deciding on your loan rate, the lender also looks at your affordability and even information it already has about you, for example if you have another product with the same firm.
The cost of the loan
The loan will be less expensive overall if you choose a shorter loan term, but you’ll pay more monthly. Because £10,000 is a large amount, a shorter loan term means that your monthly repayments could be expensive.
On the other hand, longer loan terms make the monthly repayments smaller, but the loan will be more expensive overall.
It’s important that the monthly repayments are affordable and you’re comfortable with the total cost of the loan. You can complete a budget to work out what you can afford monthly.
Your credit history
To borrow £10,000, many lenders will require that you have a good credit history.
The lender usually checks your credit history when you apply for a loan, which helps them work out the likelihood you’ll keep up with your repayments.
Your credit score is a three-digit number that represents how lenders may view your credit application. Knowing your credit score gives you an idea of the borrowing options available to you:
- a bad credit score indicates that your options for borrowing are more limited – you may receive a higher interest rate, or your application could be rejected altogether
- a good credit score means it’s more likely that your application will be accepted and that you’ll receive a good interest rate
If you don’t have the best credit score and don’t need the money straight away, improving it before applying for a £10,000 loan could open more options for borrowing and make the loan cheaper.
It takes a while to improve your credit score by making payments on your credit accounts on time, so give yourself between six and 12 months to build a positive history.
NerdWallet’s star rating
Our star rating can help you compare loans because we rank providers based on features like repayment flexibility and the ease and speed of the application process.
For instance, does the lender charge a fee to settle the loan earlier than planned? Is there a large range of payment amounts and loan terms to choose from?
These ratings are based on 20 of the features that customers have told us are the most important.
We review the personal loans market monthly, checking the ratings that we’ve awarded. We gather information from lenders’ websites, company representatives and the independent financial product analyst Defaqto. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy.
Our star ratings are based on this data across all products and features and presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’. We don’t factor APR into our star ratings.
Read more about our review methodology and what we mean by ‘best’.
>> MORE: Compare the best personal loans
Taking a £10,000 loan over different loan terms
You need to pick how long you’d like to pay the £10,000 loan back over when you apply. For a £10,000 loan this can typically be between one and five years, but some lenders may offer longer terms.
The longer the loan term, the more expensive your loan will be overall. But your monthly repayments will be higher if you choose a shorter loan term, so it’s important to consider what you’re comfortable with.
The table below is only for illustrative purposes, but it gives an idea of the monthly repayments and total repaid over different terms for a £10,000 loan taken at a 6.9% APR. You can see that shorter loan terms for a £10,000 loan mean significant monthly repayments:
| £10,000 taken over | Monthly repayments | Total repaid | Interest paid |
|---|---|---|---|
| One year | £864.01 | £10,368.01 | £368.01 |
| Two years | £446.41 | £10,713.78 | £713.78 |
| Five years | £196.60 | £11,795.58 | £1,795.58 |
To work out what you can afford, the lender may have a loan calculator on its website you can use to check what your monthly payments might be. You can also use our personal loans calculator to estimate your monthly repayments for a £10,000 loan over different terms and APRs.
Sam Bromley, Lead Writer and Personal Loans Expert at NerdWallet
What our Nerds say…
“If you choose a longer loan term, you can always make extra repayments to help reduce the overall cost of the loan. Be sure to check whether the lender charges any fees or places any restrictions on overpayments.”
What can you use a £10,000 loan for?
A £10,000 unsecured loan can help pay for a significant cost, such as home improvements or a wedding. The lender will often ask why you want to borrow the money when you apply. You can mostly put a loan towards whatever you like, but there are restrictions on what you can borrow for. You can’t use a personal loan for investing, gambling, starting a business or as a deposit for a house, for instance.
Whatever your reasons for borrowing, make sure you don’t apply for more than you need. If your repayments are higher than necessary and your financial circumstances change, your loan could become less affordable. If you then miss one or more payments, your debt will build and your credit file will be damaged.
You might want to borrow £10,000 to help pay for:
Unsecured personal loan providers often advertise home improvement loans, but these aren’t usually a separate product. A home improvement loan is a regular personal loan that the borrower puts towards renovating their property.
If you’ve planned a renovation such as a new kitchen and know you need £10,000 to get started, an unsecured loan is an option to consider.
A debt consolidation loan is a loan used to pay off existing debts, leaving you making one monthly repayment to the new lender.
You might choose to consolidate your debt if you have several existing debts that you’re currently repaying at higher interest rates, for example payday loans, short term loans or credit cards.
If you’re confident you can get a new loan at a significantly lower interest rate than your existing debts, your overall debt could become cheaper by consolidating. But it’s important to think about the loan term too, because if you want to pay off the new £10,000 loan over a long term your debt could become more costly.
You can request settlement figures from your existing creditors to find out how much it will cost to pay off your existing debt. It’s a good idea to use a personal loan calculator to work out how much the new loan could cost overall.
Because £10,000 is a significant amount, it’s a good idea to get free advice from a debt charity such as StepChange or National Debtline before going ahead with debt consolidation. It’s possible that taking out further credit won’t be the best option.
If you’re planning a trip and have budgeted the money you need, a £10,000 loan could help you go away sooner rather than later.
But when it comes to holidays, consider how comfortable you are with the fact you may be paying back a £10,000 loan over several years. If you can’t afford the holiday now, it’s often a good idea to delay the trip if you can, and create a savings plan instead. Even if you still need to borrow money to help fund the holiday, a smaller loan amount can make your repayments more manageable, even over shorter loan terms.
An unsecured personal loan is an option when buying a car or other vehicle, along with car finance.
Using a personal loan means you’ll own the car straight away, but be sure to check the loan’s interest rate and fees against your other options.
By some estimates the average cost of a wedding in the UK is over £20,000, so you might need to borrow £10,000 to help fund your big day.
Make sure you’ve created a budget for your wedding and only borrow what you need. If you’ve got enough time, it’s often better to save money than take on debt. It’s possible you might not need to borrow as much as £10,000 if you use savings, making your monthly repayments more comfortable.
applying. Many lenders need you to be employed and earning a regular income, so a loan might only be suitable if you’re considering part-time courses.
Tuition fees for a postgraduate degree are often around £10,000, but government student loans are likely to be a better option for funding degrees than a personal loan. A personal loan can be an option for funding education, but it’s important to look at the provider’s lending criteria before
Different types of £10,000 loan
There are different types of £10,000 loan available, including bad credit loans for people with a poorer or more limited credit history. However, it’s important to consider the advantages and the disadvantages of each when deciding what type of loan to apply for.
If you’ve got a less-than-perfect financial history, for example you’ve missed payments on credit agreements in the past, you might find it easier to be accepted for a loan from a specialist bad credit provider.
Bad credit lenders usually offer lower maximum loan sizes, but a few providers we review are willing to lend £10,000. Keep in mind that bad credit providers charge higher interest rates because of the higher risk of lending to someone with a poorer credit history. A £10,000 bad credit loan taken over five years could cost more than £7,000 in interest and other charges.
Secured loans require you to provide an asset as security against the money you borrow. This asset is usually your home, meaning you could lose your property if you fail to keep up with the repayments.
Secured loan providers usually offer higher maximum loan amounts and longer loan terms than unsecured loan providers, sometimes at lower interest rates. This is because the security reduces some of the risk for the lender. £10,000 is the minimum loan size that some secured lenders will consider.
Secured loans are riskier than unsecured loans for borrowers because of the possibility of losing your home.
Guarantor loan providers ask that you provide a guarantor, which is another person on the agreement who can step in and cover your payments if your personal circumstances change. Because you need to provide a guarantor, this type of loan can be easier to get than a regular loan.
Some lenders offer guarantor loans of £10,000, but think about how your relationship with your guarantor could be affected by the loan before applying. Willould they definitely be comfortable with covering your repayments if your financial situation changes?
A 0% interest credit card offers an introductory interest-free period, meaning you can spread the cost of a large purchase over several months without paying interest.
But £10,000 is considered a high credit limit and it won’t be clear what limit the provider will offer before applying. The debt could also become very costly if you’re unable to pay off the balance before the end of the interest-free period, so a 0% interest credit card is probably more suitable if you’re looking to borrow a smaller amount.
Credit union loans of £10,000 may be available, depending on where you live and which credit union you can join. If you have a poor credit history, a credit union loan can be a cheaper alternative than a bad credit loan.
Credit unions are financial co-operatives that require members to have a ‘common bond’, for example sharing an employer or living in the same area. There’s a cap on the interest rate that credit unions can charge, but it will likely still be higher than a regular personal loan.
Can you get a £10,000 loan for bad credit?
There are specialist lenders who provide loans for bad credit, so you may be able to get a £10,000 loan even if you don’t have the best credit score.
However, your options will be more limited than if you have a better credit score. Some of the bad credit lenders we review don’t offer loans of £10,000 for example, with a maximum loan of £5,000 available.
Bad credit loans are more expensive than regular personal loans. Providers charge higher interest rates because they think there’s an increased risk of lending to someone who can’t show that they’ve got a history of making repayments on time.
What is a representative example?
Lenders are required to show you a representative example, which displays the cost of borrowing a particular amount over a specific period. The example displays:
- An example loan amount, such as £10,000.
- An example loan term, such as 60 months.
- A monthly repayment amount and the total repayable over the loan term.
- The annual interest rate and whether it’s fixed or variable.
» MORE: Compare the best bad credit loans
£10,000 loan: am I eligible?
Eligibility for a £10,000 loan depends on the lender but there are some common loans eligibility criteria. Lenders often display loan eligibility criteria on their websites.
You’ll often need to:
- have a regular income
- be a UK resident
- have a good credit history
- be at least 18
How to check your eligibility for a £10,000 loan
Lenders usually carry out a ‘hard’ search of your credit history when you apply for a loan, which is a full look at your credit file. Too many hard searches over a short time can damage your credit score because it can signal that you’re relying on credit, so you’ll want to be confident about being accepted for a loan.
One way to feel confident is by checking your eligibility for a loan before applying, which many lenders allow you to do on their website.
You usually have to enter details such as your address history and financial situation. Then the lender carries out a ‘soft’ credit check, which doesn’t damage your credit score and only you can see on your credit report. After its checks, the lender should be able to tell you the likelihood of being accepted for a loan.
The lender may also give you an idea of the rate you’re likely to receive, but the final decision on your application and rate will always come when you formally apply for the loan.
Otherwise, you could use a service that checks your eligibility for a loan across multiple lenders, showing you loans you’re likely to qualify for. These loan eligibility services should also only carry out a ‘soft’ search after you’ve entered your information, but be sure to check beforehand.
Checking your credit score before applying
Your credit score helps you to work out the likelihood of being accepted for a loan. A better score indicates that you’ll have more options for borrowing than someone with a poorer score. Your loan will probably be cheaper too.
If you don’t need the money right now, it’s worth improving your score before applying for a £10,000 loan. The total cost of a £10,000 loan over five years from the cheapest bad credit lender is over £5,000 more expensive than from the cheapest regular provider.
It can take from six months to a year to improve your score, because lenders want to see a track record of making your repayments on time.
How to apply for a £10,000 loan
When you’ve compared loans and checked your eligibility, you can go ahead and apply for the £10,000 loan from your chosen provider.
You’ll need to have certain information to hand, for example your address history and details about your income and outgoings. You should check what documents the lender expects to see, such as proof of your identity.
Depending on the lender, you may be able to apply:
- on the lender’s website
- using the lender’s app
- over the phone
- in branch
>> MORE: How to apply for a loan
Will a £10,000 loan affect my credit score?
When you apply for a loan the lender will carry out a ‘hard’ credit check, which shows on your credit report. Too many hard credit checks over a short time can damage your score, because it suggests you’re relying on credit.
If your application is accepted, the £10,000 loan will show in your credit file and the lender will report information about your payments to one or more of the credit reference agencies.
Missing payments will harm your credit score, while making your payments on time can help build a good credit history.
The UK’s three main credit reference agencies are Equifax, Experian and TransUnion.
>> MORE: What affects your credit score?
£10,000 loan FAQs
Lenders are required to show you a representative APR, which helps you compare how much a £10,000 loan would cost each month. You can use the loan calculator that many lenders offer on their websites to get an idea of your monthly payments.
The monthly repayments and total cost of the loan depends on the loan term you choose. Based on the representative APR of 6.9% that one lender offers for £10,000 over five years, your monthly repayments would be approximately £196.60.
Many of the UK’s major banks offer personal loans of £10,000, including Halifax, TSB, Santander and Lloyds. You’ll likely need to have a good credit history and be earning a regular income to be eligible for a loan from a bank.
You may need to hold a current account with the bank before being able to apply for a loan, so check this when comparing products.
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