A personal loan is not secured against an asset and therefore is typically of a lower value (compared to a secured loan). You pay back the amount that you have borrowed plus the interest over a fixed period of time (typically 1 to 7 years).
A personal loan can usually be used for any reason and gives you the money upfront so you can spread the payments over a number of years.
Typical Reasons for a personal Loan
Debt Consolidation – One of the most common reasons to take out a loan, if you owe multiple creditors money it can mean you just have one monthly payment, it can also reduce the level of interest you pay if you have a credit card debt (although you should look at a interest free balance transfer if you are able to pay back the outstanding amount in the interest free period). For a lot of people it gives better financial planning because there is one fixed repayment over a fixed period of time and as long as all of the payments have been met, the balance will be zero at the end of the term, whereas with a credit card debt, you might have paid the same amount but only cleared 20% of your balance.
Holiday – Do you deserve a treat? Have you got a dream destination on your bucket list? A loan for a holiday can provide the dream trip and allow you to pay back manageable amounts over a number of years.
Unexpected Bills – For some it could be a broken boiler, for others it is a high vet bill or it could be a broken-down vehicle whatever the unexpected reason is, we can help you find the right loan.
Car Loan – Looking for your first car or wanting to newer model? A car loan is an easy way to get the car you want now. It gives you added flexibility that you have the money before you negotiate and there are limitations on modifying the car compared to buying on hire purchase (HP) or car finance. It is worth noting that a car loan is an unsecured loan and the vehicle is not offered as security on the loan, whereas with hire purchase or car finance if you miss repayments your car can be repossessed by the lender.
Wedding or Special Occasion – You have the perfect partner and now you want the perfect day but it can be difficult having the cost of a wedding in your savings so a loan will help spread the cost of your big day. The same could be said for another occasion, whether it be a landmark birthday, a retirement party or an anniversary.
Home Improvement – Have you grown tired of your kitchen or do you need new windows to improve your curb appeal, a home improvement loan can help you get your home to how you want it to be.
In most cases, in order to be eligible for the personal loan you need to meet all of the following criteria;
You must be aged 18+
You must be a UK resident
You must have a UK current account
If you meet these requirements then the lender will look in to your current financial situation and your credit history.
If you have previously missed repayments on loans or credit agreements (credit cards, phone contracts, car lease etc) then this will negatively affect your credit score, you can still apply for and receive a personal loan but it might be at a higher interest rate (APR), although some lenders will decline to offer a loan if they feel the risk is too great.
Free Price Compare help secure loans for people with a good and bad credit history and it will not affect your credit score to do an initial inquiry.
What should I consider when taking out a personal loan?