Personal loans
What is a personal loan?
A personal loan (unsecured loan) is a sum of money provided to you by a lender with an amount of interest added to it. This interest varies between lenders and is agreed to by yourself prior to taking out the loan. Personal loans are usually repaid in monthly instalments, over a prearranged number of months / years with the interest added to it.
Personal loans are generally of lower value than that of secured loans (homeowner loans) which makes them easier to obtain, this is because there much less risk to the lender. A personal loan is similar to a secured loan but it does not have any asset(s) attached to it so repossession can not occur. However, failure to meet the regular personal loan re-payments can still result in the lender taking legal action against you.
What types of personal loan are there?
The most common types of personal loan are:
- Fixed - the interest rate will stay the same throughout the period of the loan, in other words your monthly instalments will remain unchanged.
- Variable - the interest rate may rise / decline depending on whether the bank base rate changes, this means that your monthly instalments will fluctuate. Some people prefer this method.
As a rule of thumb it's usually safe to say that the lower the APR, the cheaper the loan, but beware, lenders usually quote the word "Typical" next to an APR, the figures quoted may vary depending on your personal circumstances. Make sure that you read the small print provided by the lender to ensure there are no hidden costs of charges included in your personal loan.
Why would I want a personal loan?
There are many reasons why people take out a personal loan, here are a few of the most common:
- New car
- Home improvement
- Dream holiday
- Debt consolidation
- Credit card re-payment
How do I get a personal loan?
For a personal loan quote or to compare personal loans please take a look at our personal loan providers section.