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Compare £4,000 loans

It’s common for many of us to take out a loan at some point in our lives, whether it’s for a wedding, sorting out debts or home renovations. With careful thought and planning, the right loan could turn out to be a useful financial decision.

Learn all about £4,000 loans and compare the different lenders.

Should I take out a £4,000 loan?

Everyone has their reasons for borrowing. Perhaps you’re planning a kitchen makeover, helping out with the costs of a wedding or putting a deposit down on a new car. Taking out a £4k loan could be what you need.

But you shouldn’t rush into making a decision. Taking out a loan needs careful consideration and financial planning. You need to be sure you can afford the repayments each month.

You’ll also want to be sure you can get the right loan for your needs. It’s always worth shopping around and comparing loans to see what’s out there.

What types of 4K loans are there?

To make sure you get the right loan for your needs, consider these options:

  • Personal unsecured loans

    This type of loan allows you to borrow a fixed amount of money for a fixed length of time. Unsecured loans are suitable for smaller amounts, like when you need to borrow £4,000. This is because you don’t need to put up a high-value asset as security against the loan. This means there's no collateral for your lender to seize if you miss repayments. However, if you continue to miss repayments and are taken to court, debt collectors may use your assets to pay off the outstanding loan, along with any additional charges.

  • Homeowner secured loans
    Secured loans are usually for larger amounts of money, although they could be available for £4,000 loans too. Although they might offer lower interest rates than an unsecured loan, secured loans rely on using your home as a guarantee. If you have problems paying back the loan, you risk losing your home. So, think carefully and act responsibly.
  • Guarantor loans
    You could ask a friend or family member (one with more assets and better credit) to co-sign your loan. It ultimately means they would have to pay back the loan if you don’t keep up your payments.
  • Payday loans
    You may use a payday loan to bridge the gap between the time you run out of money and the time you get paid again. Payday loans are unsecured, so you don’t need to pledge your home or car to get one, but a downside could be a higher rate of interest. We don’t offer this type of loan on our site.
  • Instalment loans
    Although most loans are paid in instalments, this phrase is often used to specifically describe short-term, high-interest loans paid back monthly.
  • Peer-to-peer loans
    Peer-to-peer loans allow you to borrow money from people, instead of a bank or other traditional lenders. These people set the loan rates, which means they could vary more significantly.

Whatever type of loan you choose, take some time to work out how much you can afford to repay each month. Missing payments could damage your credit history, and if you’re unable to pay back a loan, you could be taken to court.

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident aged 18 or over. Credit is subject to status and eligibility.

Did you know?

If you need to borrow at the top end of £4,000 – so closer to £4,999 – it may be worth checking if a loan of £5,000 would be cheaper overall. These might have lower interest rates. But work out the costs carefully as you should never borrow more than you can afford to pay back. 

Loans calculator

If you’re thinking about taking out a loan, use our loans calculator to work out how much you can afford to borrow and how much it’ll cost each month.

Loan calculator

What to consider when choosing a £4K loan

When looking for a loan, you want to make sure you get the best deal for your needs and circumstances. 

Here’s a few things to consider: 

The annual percentage rate (APR) shows the total amount you’ll pay for your loan over the course of a year. It takes into account interest and any other standard charges added to the loan.

Be aware that you might not get the advertised APR. It’s often ‘representative’ and only needs to be offered to 51% of customers – typically those with the best credit rating. If your credit rating is less than perfect, the interest rate you’re offered might be much higher.

The total cost of the loan
Spreading your £4,000 loan over three or five years may mean cheaper monthly repayments – but it could cost you more in the long run. That’s because you’ll be paying interest for longer.

Monthly repayments
Make sure you work out a repayment plan you can comfortably afford each month. There’s no point in trying to pay off the loan over a shorter length of time if you’re struggling with the repayments each month.

Additional fees
You’ll need to take into account the administration fees you’ll pay for setting up the loan. These are called arrangement fees and are included in the total cost of your loan.

And if you think you might be able to pay off the loan earlier, check if the lender charges a fee for early repayment.

How do I apply for a £4,000 loan?

You can apply for most loans over the phone, in person at your lender’s local branch or online via the lender’s website or app. Be aware that peer-to-peer borrowing is only available online.

When you apply for a loan, the lender will carry out a ‘hard credit check’, which will be marked on your credit file. Too many applications could damage your credit score.

Before you apply for a loan, use our eligibility checker to see which loans you’re most likely to be accepted for and how much you could borrow. It’s a ‘soft search’ that doesn’t affect your credit score in any way.

Can I get a £4,000 loan with bad credit?

It might be more difficult, but it’s still possible to get a loan for £4,000 if your credit rating is poor. You could even get a £4,000 loan with bad credit and no guarantor.

In fact, a bad credit loan could help build your credit score if you make your repayments on time each month. The bad news is that interest rates are usually far higher than on other types of loans.

Another option is a credit building credit card. Although your credit limit won’t be as high as £4,000, regularly paying off your balance could help improve your credit score over time.

Can I use a £4,000 loan to pay off other debts? 

If you’re paying high interest on other debts, such as credit card or store card debts, you could combine them into a debt consolidation loan. That way you’d have just one monthly payment to make. It could be a good idea if you can find a loan with a lower interest rate than the debts you already have. 

However, it’s still a debt and might not work for you, especially if you’re tempted to start spending again. The last thing you want is to build up more debt on top of what you already owe. Plus, there may be charges for settling your other loans early, and you may end up paying more in interest overall. 

Find out more about the pros and cons of debt consolidation loans

Are there other ways to borrow £4,000?

If you want to borrow £4,000 without taking out a loan, you might want to consider:

0% purchase credit card – allows you to make purchases without having to pay interest for an agreed period of time. Just make sure you pay off the full balance before the 0% period ends. That way, you’ll avoid being stung by interest charges on the remaining balance.

0% balance transfer credit card – allows you to move your existing credit card debts onto one card with 0% interest for a limited period. Again, just make sure you pay off what you owe before the interest-free period ends.

Money transfer credit card – lets you transfer money from a credit card into your current bank account without the need for a loan. You should be able to find a 0% interest deal, but you may need to pay a transfer fee – usually around 1-5%.

Top tips for taking out a loan 

  • Before you apply, check out your credit score to make sure it’s in good shape.   
  • Remember the golden rule: borrow as little as possible and pay it back as quickly as possible.
  • Work out a sensible budget before you apply for a loan to make sure you can afford the monthly repayments.
  • Be careful of borrowing to pay off existing debts – it could get you into more debt in the longer term.
  • Be wary of payday loans – the interest rates can be astronomical.
  • Take time to shop around and compare what’s on offer – don’t just rush in and settle for the first rate you’re offered.

How to compare £4,000 loans

With the amount of loan providers out there, finding a £4,000 loan that works best for you can be time-consuming. 

Fortunately, you’re in the right place. All you need to do is use our comparison service and answer a few questions, so you can compare loan providers and products to find the right deal.

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Frequently asked questions

Can I pay off my £4,000 loan early?

Your lender must allow you to pay off your loan early, but they might charge an early repayment charge (ERC).

However, if your loan agreement is covered by the Consumer Credit Act, you won’t need to pay an ERC on a £4k loan. Under the directive, you can make early repayments up to £8,000 a year without penalty.

Can I use a £4,000 loan to buy a car?

Yes, you could take out a £4,000 loan to buy a car. It also means you’ll own your car from the outset.

What credit score rating do I need to borrow £4k?

It might be easier to get a £4,000 loan if you have a good credit score, especially if you want a lower interest rate.

However, the UK’s three main credit reference agencies each have different ratings for what they consider a good credit score. Ultimately, it’s down to the individual lender to decide whether to accept or refuse your loan application.

Page last reviewed on 03 OCTOBER 2023
by Sajni Shah