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A Comprehensive Guide on Loans for 20-Year-Olds

Navigating the financial world in your 20s can be challenging. Whether you're looking to make a big move, start a business, consolidate debt, pay for school, or build credit, a personal loan can be a game-changer. Our guide provides insightful tips, compares trusted lenders, and helps you understand the nuances of personal loans tailored for young adults like you.
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The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
100.00 – 2000.00 $

Effective interest rate on the product

0.05 – 2.50 %

Loan term for the financial product

5 days – 3 months
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Rating by Finanso®

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

(20 Ratings)
Recommended FinScore™

Effective interest rate on the product

up to 35.99%

Loan term for the financial product

up to 60 months
Best Personal Loan Today 28.02.2024*
Personal Loans
Rating by Finanso®

The rating by Finanso® is determined by our editorial team. The scoring formula includes a financial product type as well as tariffs, fees, rewards and other options.

Recommended FinScore™
2000.00 – 100000.00 $

Effective interest rate on the product

6.34 – 35.89 %

Loan term for the financial product

2 months – 72 months
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The Legal Status of Personal Loans in the USA

In the USA, personal loans are legal and typically used for non-business needs. They must be repaid according to the loan agreement, which includes interest and a repayment timeline. Various laws regulate these loans, including the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, and the Truth in Lending. These laws protect both the lender's interests and the borrower's rights, ensuring fairness and transparency in the lending process.

The application process was a breeze, and I received a response within minutes. This straightforward and prompt procedure proved to be a great help to me during a crucial time of need.
JG Wentworth
The assistance I received was exceptional. My representative handled my case with care and provided all the necessary information...
OneMain Financial
The loan application process was straightforward, and the representative I interacted with displayed patience, provided informative answers, and was quite pleasant throughout...
My Funding Choices
The process was swift and straightforward, which was particularly helpful during a time when, despite my reluctance to seek assistance, I genuinely needed help.
Plain Green Loans
The interest rate is shockingly high, and it feels like taking advantage of individuals facing financial challenges when unexpected expenses arise...
Advance America
I have never encountered any issues with this company. They consistently deliver funds on time, and the repayment process is straightforward...
A Comprehensive Guide on Loans for 20-Year-Olds

What are loans for 20-year-olds?

Loans for 20-year-olds refer to financial products specifically targeted at individuals in their twenties who are in need of borrowing money. These loans, such as personal loans, are popular for young adults looking to fund various expenses or achieve financial goals.

Personal loans, also known as unsecured personal loans, are one of the common loan products available for 20-year-olds. These loans can be obtained from different sources, including online lenders, credit unions, and traditional financial institutions. They offer loan proceeds that can be used for various purposes, such as education expenses, travel, or debt consolidation.


Loans for 20-year-olds come with specific features that cater to the unique needs and circumstances of individuals in this age group.

  • Personal Loan Options. Personal loans are a common option for 20-year-olds. These loans are typically unsecured and can be used for various purposes, such as education expenses, travel, or debt consolidation.

  • Credit History and Credit Score. Lenders consider the credit history and credit score of 20-year-olds to assess their creditworthiness. A good credit history and credit score increase the chances of loan approval and favorable interest rates.

  • Possible Origination Fees. Some personal loan lenders charge origination fees for processing loan applications and disbursing the funds. Understanding the potential origination fees associated with a loan is important before committing to it.

  • Payday Loan Options. While accessible to individuals with poor credit, payday loans should be approached with caution. They typically come with very high-interest rates and should only be considered as a last resort due to their potential financial risks.

  • Loan Amount and Repayment Terms. The loan amount and repayment terms are important considerations for 20-year-olds. Loan amounts should be tailored to meet specific needs, and repayment terms should be manageable within their financial capabilities.

  • Interest Rates. Interest rates play a significant role in determining the cost of borrowing. 20-year-olds should compare and consider interest rates from different lenders to ensure they obtain the most favorable terms possible.

  • Online Lenders. Online lenders provide an alternative option for 20-year-olds to obtain loans. These lenders often offer convenient application processes and quick loan approvals.

  • Credit Builder Loan Options. Credit builder loans are specifically designed to help individuals build or improve their credit history. These loans may come with higher interest rates but can be valuable for establishing a positive credit profile.

  • Loan Approval and On-Time Payments. Loan approval is contingent upon meeting the lender's criteria and demonstrating responsible financial behavior. Making on-time payments is crucial for maintaining or improving credit scores and increasing the chances of future loan approvals.

Pros and cons


Building Credit. Successfully repaying loans can help 20-year-olds establish and build their credit history and improve their credit score.

Flexible Loan Options. Various types of loans are available, such as personal loans and credit builder loans, providing flexibility to meet different needs and financial situations.

Opportunity for Financial Growth. Loans can provide an opportunity for 20-year-olds to invest in their education, start a business, or make other financial moves that can contribute to long-term growth and success.

Establishing Financial Responsibility. Taking on a loan and making timely repayments can help 20-year-olds develop financial discipline and responsibility, which are valuable skills for future financial endeavors.

Increased Buying Power. Loans can give 20-year-olds the ability to make larger purchases, such as a car or home, which may not be feasible with their current savings.


Credit Score Impact. Late or missed payments on loans can negatively impact 20-year-olds' credit scores, making it harder to secure favorable loan terms or obtain credit in the future.

Dependency on Debt. Relying on loans too heavily can create a dependency on debt, potentially leading to a cycle of borrowing and financial instability.

High-Interest Rates. Some loans, such as payday loans, may have very high-interest rates, leading to increased borrowing costs.

Credit Requirements. Lenders often consider credit history and credit scores, making it challenging for individuals with poor or limited credit to qualify for favorable loan terms.

Financial Risk. Taking on loans at a young age can involve financial risks if the borrower fails to make timely repayments or struggles to manage the debt effectively.

How can 20-year-olds apply for a personal loan?

Apply for a loan

  1. Check Credit History and Credit Score. Review your credit history and credit score to understand your current creditworthiness. Obtain a credit report from credit bureaus to identify any errors or areas for improvement.

  2. Research Loan Options. Explore different types of loans available for 20-year-olds, such as personal, credit builder, or small personal loans. Compare interest rates, repayment terms, and loan amounts offered by various lenders, including online lenders, credit unions, and traditional financial institutions.

  3. Calculate Debt-to-Income Ratio. Calculate your debt-to-income ratio, which compares your monthly debt obligations to your monthly income. Lenders often consider this ratio to assess your ability to repay the loan.

  4. Improve Credit Score, if necessary. If your credit score is low, take steps to improve it before applying for a loan. Paying bills on time, reducing credit card balances, and disputing any inaccuracies on your credit report can help improve your creditworthiness.

  5. Gather Required Documents. Prepare the necessary documents for the loan application, including identification documents, proof of income, bank statements, and any other documents requested by the lender. These documents help verify your identity, financial stability, and ability to repay the loan.

  6. Research and Choose Lenders. Research personal loan lenders that offer loans to 20-year-olds. Consider factors such as reputation, customer reviews, interest rates, origination fees, and customer service to choose reputable lenders who align with your needs and financial goals.

  7. Submit Loan Application. Complete the loan application form provided by the chosen lender. Provide accurate and truthful information, ensuring all required fields are filled out. Be prepared to provide details about your employment, income, expenses, and any other information requested by the lender.

  8. Review Loan Agreement. Carefully review the loan agreement before accepting the loan. Pay attention to the interest rate, repayment terms, origination fees, and any other fees or charges associated with the loan. Ensure you understand the terms and conditions before proceeding.

  9. Submit Additional Documentation if Required. In some cases, the lender may request additional documentation or clarification. Be prompt in providing any additional information requested to avoid delays in loan approval.

  10. Wait for Loan Approval. Once you have submitted the loan application and required documentation, await the lender's decision. The approval process may involve a credit check, your credit history and score evaluation, and verification of the information provided.

  11. Make Timely Loan Payments. Once you've secured the loan, ensure you make all your payments on time. Timely payments will help you build a positive credit history and prevent late fees and negative impacts on your credit score.

Requirements and conditions

  1. Citizenship or Residency. Some lenders may require applicants to be citizens or permanent residents of the country where the loan is being offered.

  2. Minimum Income Threshold. Lenders may have a minimum income requirement to ensure that the applicant has the financial means to repay the loan. This threshold may vary depending on the loan amount and repayment terms.

  3. Employment History. Lenders may consider the applicant's employment history and require a minimum length of employment, such as six months or one year, to demonstrate stability and consistent income.

  4. Bank Account Requirement. Many lenders require applicants to have a valid bank account where loan funds can be deposited, and loan payments can be withdrawn. This facilitates the loan transaction and ensures a reliable repayment method.

  5. Credit Check and Credit Usage. Lenders typically perform a credit check to assess the applicant's creditworthiness. They may also consider the applicant's credit usage, including using existing credit lines, such as credit cards or other loans.

  6. Age Requirement. The applicant must be at least 18 years old to be eligible for most loans. However, some lenders may require the applicant to be at least 21 or 25 years old.

  7. Application Fee or Origination Fee. Some lenders may charge an application or origination fee, a one-time fee deducted from the loan amount. It's important to consider these fees when assessing the total cost of the loan.

Best places to get personal loans for 20-year-olds today 28.02.2024

Bank of America

Apply for a loan

Bank of America offers personal loans and student loans that may be accessible to individuals in their 20s.Bank of America


Apply for a loan

Citibank provides personal loans, credit cards, and student loans that may be accessible to 20-year-olds.Citibank


Apply for a loan

SoFi is an online lender that offers personal loans, student loan refinancing, and other financial products tailored to young professionals, including 20-year-olds.SoFi


Apply for a loan

Upstart is an online lending platform that uses alternative data and artificial intelligence to assess creditworthiness and provide personal loans to young borrowers, including 20-year-olds.Upstart

Ways to receive the money

  • Direct Deposit. Lenders may deposit the loan funds directly into the borrower's bank account. This is a convenient and secure method, as the borrower can access the funds immediately and use them as needed.

  • Check or Money Order. Some lenders may send a physical check or money order to the borrower's mailing address. The borrower can then deposit or cash the check to access the loan amount.

  • Wire Transfer. In certain cases, lenders may opt for a wire transfer to send the loan funds directly to the borrower's bank account. This method allows for a quick and secure transfer of funds.

  • Prepaid Debit Card. In some instances, lenders may provide a prepaid debit card loaded with the loan amount. The borrower can use the card for purchases or withdraw cash as needed.

Things to pay attention to

  1. Loan Types. Explore different loan options such as personal loans, secured loans, unsecured personal loans, or small personal loans to find the best fit for your needs.

  2. Interest Rates. Compare interest rates offered by different lenders to secure the most favorable rates. Avoid loans with very high-interest rates that can lead to financial strain.

  3. Repayment Terms and Monthly Payments. Understand the repayment terms, including the loan term, monthly payment amount, and any flexibility in loan amounts. Ensure that the monthly payments fit within your budget.

  4. Lender Options. Research reputable personal loan lenders, online lenders, credit unions, and financial institutions that offer loans to 20-year-olds. Compare their offerings, loan products, and customer reviews to find reliable options.

  5. Loan Approval and Application Process. Understand the loan approval requirements, including employment or income verification, and gather the necessary documents before applying. Be prepared for a credit check and possible hard credit inquiry.

  6. Debt-to-Income Ratio. Assess your debt-to-income ratio to ensure you can comfortably manage loan payments alongside other financial obligations.

How to repay a loan for 20-year-olds?

To repay a loan as an 20-year-old:

  1. Understand the loan terms.

  2. Evaluate income and expenses.

  3. Create a budget.

  4. Minimize unnecessary spending.

  5. Make timely payments.

  6. Consider additional income opportunities.

  7. Communicate with the lender.

  8. Track progress.


Apply for a loan

  1. Cash Advances. Cash advances allow individuals to borrow money against their credit card's available balance. However, it's important to note that cash advances often come with higher interest rates and additional fees, so using them sparingly and exploring other options first is advisable.

  2. Secured Credit Card. A secured credit card can be viable for those looking to build or improve their credit history. With a secured credit card, individuals are required to provide a security deposit, which determines their credit limit. By using the card responsibly and making timely payments, they can establish a positive credit history.

  3. Alternative Payday Loans. Alternative payday loans, also known as payday alternative loans (PALs), are offered by some credit unions as a more affordable and regulated alternative to traditional payday loans. PALs typically have lower interest rates and more favorable terms, making them a better option for short-term borrowing.

  4. Bad Credit Loans. Individuals with poor credit may have limited options, but there are lenders who specialize in providing loans specifically designed for those with bad credit. These loans often come with higher interest rates and stricter terms, so borrowers should carefully consider them and assess their ability to repay.

  5. Secured Personal Loans. Secured personal loans require collateral, such as a savings account or a valuable asset, to secure the loan. Borrowers may access lower interest rates and higher loan amounts by offering collateral. However, it's crucial to understand the risks involved, as failure to repay the loan could result in collateral loss.

Editorial opinion

Regarding loans for 20-year-olds, there are various options to consider. One such option is a secured loan, which requires collateral to secure the loan. This type of loan offers lower interest rates and the possibility of higher loan amounts. On the other hand, unsecured personal loans are available without collateral, but they often come with higher interest rates due to the increased risk for lenders. Federal credit unions are an excellent choice for 20-year-olds seeking loans. These institutions typically offer lower interest rates, more favorable terms, and personalized service than traditional banks. They prioritize the well-being of their members, which can be highly beneficial for young borrowers. It's important to be cautious of certain aspects when taking out loans. Accumulating credit card debt can be detrimental to one's financial health, as high-interest rates and minimum payments can quickly lead to a debt spiral. Payday lenders, known for their predatory practices, should be avoided as they often charge exorbitant interest rates and fees. For individuals with existing credit card debt, credit card refinancing can be an option worth exploring. Borrowers can save money on interest payments by transferring balances to a new credit card with lower interest rates. Borrowers should know potential lender charges, such as origination fees or prepayment penalties. These charges can increase the cost of borrowing, so it's crucial to carefully review the terms and conditions before proceeding. Maintaining a checking account and being a credit union member can have advantages when applying for loans. It demonstrates financial stability and a positive relationship with a financial institution, which can improve the chances of loan approval. Having excellent credit is advantageous for securing favorable loan terms. Lenders are more likely to offer lower interest rates and flexible repayment options to individuals with a high credit score. When comparing personal loan rates, borrowers should consider the annual percentage rate (APR), which includes both the interest rate and any additional fees. This provides a more accurate representation of the overall cost of the loan. For those in need of smaller loan amounts, opting for a small personal loan can be a suitable choice. These loans are specifically designed for smaller financial needs and often have more flexible eligibility requirements. While striving for the best personal loans is important, borrowers with lower credit scores might face challenges. However, there are still options available, such as loans tailored for individuals with low credit scores. It's essential to compare different lenders and their offers to find the best fit. Overall, borrowers should be cautious when taking on loans, especially if they have lower credit scores. It's advisable to carefully review the terms and conditions, seek out the best personal loan products, and consider the long-term financial implications. By making informed decisions, borrowers can secure loans with favorable interest rates, manageable repayment terms, and lower credit score requirements.


Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your state. You can verify this information with your state regulator or attorney general.
  2. Check if the lender is a member of a reputable association, such as the Community Financial Services Association of America. Membership in such organizations may provide an extra level of reliability.
  3. Carefully review all the terms and conditions of your loan contract.
  4. Thoroughly examine the interest rates and ensure that your contract includes a detailed breakdown of the total cost of the loan.
  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.
  6. Choosing a lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.


At Finanso, we've carried out a comprehensive analysis of over 50 microfinance organizations, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.

Additional recources



Can I get a loan at 20 years old?

Yes, it is possible to get a loan at 20 years old. Many lenders offer loans specifically tailored to young borrowers, including personal loans and student loans. However, eligibility requirements and loan terms may vary depending on the lender and the borrower's individual circumstances.

Can a 20-year-old with no credit get a loan?

Yes, a 20-year-old with no credit history can still be eligible for certain types of loans. Lenders understand that young individuals may not have an extensive credit history and may consider other factors, such as income and employment stability, when evaluating loan applications. However, securing loans without a credit history may be more challenging, and the interest rates or loan terms may not be as favorable as those with established credit.

What is the difference between a secured loan and an unsecured personal loan?

A secured loan is backed by collateral, such as a car or property, which the lender can seize if the borrower fails to repay the loan. On the other hand, an unsecured personal loan does not require collateral and is based primarily on the borrower's creditworthiness and ability to repay. Secured loans may have lower interest rates but carry the risk of losing the collateral, while unsecured personal loans typically have higher interest rates but do not require collateral.

How can I improve my credit score if I have a low credit score?

If you have a low credit score, there are several steps you can take to improve it:

  1. Make timely payments

  2. Reduce credit utilization

  3. Pay off debts

  4. Diversify credit types

  5. Check your credit report

  6. Establish a positive credit history

What are the benefits of obtaining a small personal loan?

Small personal loans can provide several benefits, including:

  1. Access to funds. Small personal loans can help cover unexpected expenses, finance small purchases, or bridge temporary financial gaps.

  2. Flexible repayment terms. Depending on the lender, you may have the flexibility to choose repayment terms that suit your budget, including the loan amount and duration.

  3. Building credit. Consistently repaying a small personal loan on time can help establish or improve your credit history, which can benefit you when applying for larger loans in the future.

  4. Lower interest rates. Small personal loans typically have lower interest rates than credit cards or payday loans, making them a more affordable borrowing option.

  5. Consolidation of debt. If you have multiple high-interest debts, a small personal loan can be used to consolidate them into a single, manageable monthly payment with a potentially lower interest rate.