Compare £2,000 loans

If your cash flow is more ebbing than flowing, then a £2,000 loan may be just the thing to tide you over. There are all sorts of reasons why an affordable personal loan might be just what you need.

If your cash flow is more ebbing than flowing, then a £2,000 loan may be just the thing to tide you over. There are all sorts of reasons why an affordable personal loan might be just what you need.

Anelda Knoesen
From the Money team
3
minute read
Do you know someone who could benefit from this article?
Posted 21 MAY 2021

Is a £2,000 loan right for me?

Perhaps you need to have some urgent repairs to your car or home. Or maybe you’re being financially savvy and planning to use a £2,000 loan to consolidate your existing debts into one.

Whatever your reasons, you need to make sure a loan for £2,000 is really what you want and have a solid repayment plan in place to pay it back.

How long will it take to repay a £2,000 loan?

Personal loans can typically be repaid over a period of one to 10 years - you can choose how long you want to borrow the money for. But while it might seem attractive to drive down your monthly repayments by stretching your loan over a longer period of time, you can end up paying more in the long run when all the interest adds up.

Here’s an example of a typical loan taken out over one and two years:

Initial loan Time APR Monthly repayments Total repayments
£2,000 12 months 9.9% £175 £2,104
£2,000 24 months 9.9% £92 £2,203

The golden rule is to borrow as little as possible and pay it back as quickly as possible. Always base your loan on an amount you can easily afford to repay – this will save you money and time in the long run. Keep an eye on your proposed timeline too.

Why it’s important to consider how much money you need 

Knowing how much you need to borrow will help you decide where best to find that extra cash injection. 

  • If you only need to borrow a small amount of money for a very short time, consider using your interest-free overdraft, if you have one. If not, it could be worth looking at different current accounts that offer this facility.
  • Credit cards with 0% interest on purchases could be worth a look, particularly if you need to buy something specific. As long as you pay back what you owe within the interest-free period (and make at least the minimum monthly payments on time), you can be smug in the knowledge that the credit hasn’t cost you a single penny extra. 

If you need a larger sum of money, a personal loan could be the answer. You can usually opt to borrow a minimum of £1,000, with upper limits depending on the lender. Most will lend you up to £25,000, although some may go as high as £50,000. 

The best APRs (annual percentage rate – this is the amount of interest, plus any fees, you pay on top of your loan) are reserved for customers with the best credit ratings. That’s why when you apply for a loan, you need to know that the APR you see might not be the one you get, unless it’s labelled as a guaranteed rate.

What types of loans are there?

Here are some of the types of loans available if you need to borrow £2,000:

  • Personal unsecured loans These are for a fixed amount and length of time (the ‘term’ of the loan). Monthly repayments are usually fixed. Unlike secured loans, these are not secured against an asset, like your home. But they typically charge a higher rate of interest than secured loans.
  • Guarantor loans This is where someone – usually a close family member – guarantees your loan and promises to pay the debt if you can’t.
  • Payday loans can provide a short-term solution to cash shortfalls. They’re unsecured loans, meaning no collateral is required to get one, but have very high rates of interest. We don’t offer this type of loan on our site. You’d typically use a payday loan to bridge the gap between the time you run out of money to the time you get paid again.
  • Instalment loans Most personal loans are paid back in instalments. However, this term tends to be used to distinguish short-term loans (sometimes for a period of just a few months) that are paid back in weekly or monthly instalments, from payday loans, which are paid back in one go. This type of loan tends to come with high rates of interest.
  • Peer-to-peer loans A type of unsecured personal loan available through online platforms and websites. Basically, you borrow from people rather than a bank. If your credit rating is good, a peer-to-peer loan could offer a more competitive interest rate than traditional high-street lenders.

There are also loans available for specific uses, for example:

  • Car loans A personal loan or finance to buy a car. The loan is secured against your car, so the lender could take back the vehicle if you don’t make your monthly repayments.
  • Home improvement loans These allow you to borrow money for a home renovation project. A loan for £2,000 would typically be in the form of an unsecured personal loan.
  • Debt consolidation loans Let you group together existing debts and pay them off with one convenient monthly payment. You should weigh up the pros and cons before considering this type of loan. Early repayment fees for existing debts could cancel out the benefit of a debt consolidation loan with a lower interest rate. You’ll need to do some calculations to make sure you don’t end up paying more in the long run.

Before you choose a £2,000 loan, it’s important to work out exactly how much you can afford to pay back each month. Missing repayments can damage your credit score and get you into even more debt. You also risk being taken to court.

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

Will I get the representative APR rate?

The APR – or annual percentage rate – shows the total cost of the loan over a year, including interest and other standard charges. It’s useful for comparing loans. But if the APR is ‘representative’ it’s not necessarily the rate you’ll get. In fact, only 51% of successful loan applicants get the advertised representative rate. The actual rate you receive depends on your individual circumstances and credit history.

Learn more about APR and why it matters.

Can I borrow £2,000 if I have bad credit?

It’s not impossible to get a £2,000 loan if you have a bad credit history, but your options might be limited. You might also be charged a higher interest rate.  
 
If you’ve been refused a loan because of bad credit, focus on improving your credit score before you apply again.

Are there other ways to borrow £2,000?

If you’re not sure about taking out a loan for £2,000, you might want to consider other options:

  • 0% interest credit card If you need to make an expensive purchase, a 0% purchase credit card lets you pay up front then spread the cost over a set period without having to pay interest. Just make sure you can pay off the full balance before the 0% period ends or you might be stung with high interest charges on what you owe.
  • Money transfer credit card Lets you transfer money into your bank account without the need for a loan. Although many money transfer cards offer a 0% interest period, you might be charged a transfer fee – typically around 1% to 4%. You’ll also need to make sure you pay off the full balance before the 0% period ends – after that, you’ll be charged interest on the remaining balance.
  • 0% balance transfer credit card An alternative to a debt consolidation loan, this type of card lets you transfer existing credit card debts onto one card with 0% interest for a certain period. Again, you should aim to pay off the full balance before the 0% ends or you could be hit with high interest charges on what you owe.
  • Family or friends Potentially a cheaper option as close family, like your parents, are unlikely to charge interest or want the money back within a certain time. Think carefully about this option, though, as it could harm a relationship or friendship if there’s a problem with repayments.

How do I apply for a £2,000 loan?

You can apply for a £2,000 loan at your local bank, over the phone or online. Applying online is probably the fastest way - the money could be in your account within hours, especially if you’re applying for a loan with a lender you already bank with.

Be aware that a loan application will show on your credit report. If you’re turned down or make too many loan applications in a short time, it could damage your credit rating. This is because lenders may think you’re in financial difficulties. So, it’s worth checking whether you’ll be approved before applying.

By using our eligibility checker you can find out which loans you’re likely to be accepted for before you apply. It’s a ‘soft check’ and won’t affect your credit score at all.

Find out if you’re eligible for a loan

Compare loans – the easy way

Trying to find the right type of loan can be a challenge. Luckily, our comparison service is here to make it as simple as possible by allowing you to easily see all the relevant loans for you. You can also see any age limits and if the lender will allow debt consolidation loans. Using our eligibility checker, you can shop around and compare loans quickly and easily without it harming your credit rating.

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