Personal loans
A personal loan is a sum of money you borrow from a lender, agreeing to pay it back over a certain period of time. It's up to you what you spend the money on, whether it's a new car, home improvements, a well-deserved holiday – in fact, anything at all.
The cost (the interest you pay) may vary from lender to lender, and will also depend on your credit rating – in general, the better your credit rating*, the lower the interest you'll pay on your personal loan.
There are basically two kinds of personal loan: secured and unsecured.
Secured personal loans
Taking out a secured personal loan could give you access to larger sums at a lower interest rate (than you'd get with an unsecured loan). It may also mean you can repay the money over a longer period of time, which could reduce your monthly payments, even though it could increase the overall cost of your loan.
Since secured personal loans are secured against property, they're only available to homeowners with enough equity in their home:
Equity equals value of property minus value of mortgage / loan(s) secured against it.
So, if you had a house worth £150,000 and owed £100,000 on your mortgage, you’d have £50,000 of equity in your home.
But that doesn't mean you'd be able to borrow £50,000 – we won't lend you more than you can comfortably afford to repay. Your home could be at risk if you can't keep up with the repayments on your secured personal loan.
Unsecured personal loans
Unsecured personal loans aren't secured against property, which means they're available to tenants – and to homeowners who don't want to use their home as a guarantee for a loan.
The amount you could borrow will depend on your ability to repay it, and the interest rate you're offered will depend on your credit rating.
Repaying your personal loan
With any debt, the question "How quickly should I arrange to repay?" is a vital part of financial planning. The longer a debt is running, the more interest it will accrue, so:
- Repaying quickly will mean you pay more each month but less in total
- Repaying slowly will mean you pay less each month but more in total
Before you agree to the terms of your personal loan, you should talk to your loans adviser about your income and expenditure, and about any expected changes to your circumstances. Basically, you should aim to repay the loan as quickly as possible, without putting too much strain on your monthly finances.
How do I apply?
For free, expert advice, call our personal loans experts on 0800 195 2910 and let them search for the best personal loan for you. They'll even take care of all the paperwork and administration on your behalf.
*If you'd like to know more about your credit rating, click here.
The overall cost for comparison is 12.1% APR (typical).
66% of our customers get this rate or lower