Why borrow using a personal loan?
Personal loans are commonly used to finance a car, home improvements, or to consolidate existing debt. They’re also a handy way to manage unexpected bills, or to pay for a wedding, celebration or holiday.
You could get a personal loan from a bank, building society and some other finance companies.
Decide how much you’d like to borrow, what you can afford to repay, and then set a term to suit your budget. Personal loans are typically available for 1-7 years.
Why not try a loan calculator to estimate your monthly payments?
When you borrow, you’re making a commitment to manage and repay debt responsibly, accepting that interest, fees and charges might also apply.
What’s good about a personal loan?
- With unsecured loans, you don’t need to be a homeowner to apply.
- Some lenders offer a quotation before you apply, helping you to understand if you’re likely to be eligible for a loan, without impacting your credit score and record.
- If you go on to make a full credit application, you could get an instant lending decision. Funds could even be in your nominated bank account the same day.
- If your interest rates are fixed, your loan repayments will be too, making it easier to understand your borrowing costs and keep track.
- The structured nature of a personal loan also means your interest rates could be lower than those on credit cards or overdrafts.
- On some loans, you might have the option to make overpayments without being charged extra, which could reduce your overall term and borrowing costs.
- At the end of the loan term everything will be paid off, as long as you’ve made all of the necessary payments.
- Using and managing a loan carefully could help to improve your credit score over time.
What are the drawbacks of a loan?
- You might need to be a homeowner to get a secured loan. You could lose whatever the loan is secured against if you don’t keep up with repayments.
- A personal loan isn’t as flexible as a credit card or overdraft. To borrow more in future, you’d need to apply for an additional credit product.
- If you choose a personal loan with variable interest rates, your borrowing costs and monthly payments could change over time.
- Whether or not you’re accepted, ‘hard’ credit searches could affect your credit score, especially if you make a number of full credit applications in a short time.
- Carrying a lot of debt could affect your credit score and your ability to get credit in future.
- On some loans, early repayment charges might apply if you want to overpay, or repay your balance early.
- Purchases made using cash, a debit card or bank transfer won’t be covered by Section 75 of the Consumer Credit Act 1974, unlike some purchases made using a credit card.