Personal Loans

What is a Personal Loan?

A personal loan is essentially an unsecured loan. The money can be used for any purpose. You could chose to pay off some existing small debts, or maybe you would like a holiday. The choice is yours. The lender does not ask for any surety for repayments, such as your home.

What does a Personal Loan offer?

A personal loan allows customers to borrow anything from £1,000 to £25,000. Lenders generally ask for monthly repayments to be made to them. One of the key bonus poits toa personal loan is that they tend to be on a fixed rate, so no matter what changes happen to UK interest rates, your loan repayments will not be affected and you will always repay the same amount each month. It really pays to scour the market for the best deal on personal loans as it could save you money in the long-run. so. Personal loans are not secured against your property, so your home will not automatically be at risk if you fail to make a repayment.

Personal loans are generally offered with a repayment schedule between six months and ten years. Loans tend to be cheaper if you take them out over a shorter repayment period, so keep an open mind to shorter repayment periods if you can as it may save you money in the long run. Although shorter loan terms tend to come with a higher APR (Annual Percentage Rate) than longer term loans, think about the total you will be repaying over all. It may save you money in the long term to get a shorter payment term with a higher APR.

Personal loans tend to be obtained far more quickly than other loans, such as homeowner loans. This is because there is less paperwork, so if you need a your money in a hurry, personal loans are good in that respect.

Personal loans are not completely without their risks. If you fail to keep up the payments on your loan, you could risk being taken to court by the lender. Your property could still be at risk as a result of your unpaid debts.  Lenders may take you to court and could force you to sell your property to repay your debt.  Failure to keep up repayments could also lead to you incurring CCJs (County Court Judgement). A CCJ could order you to pay off your loan in smaller monthly installments and will affect your credit rating.

Comparing APRs of personal loans is a good place to start shopping around for the best deal. It is worth noting that lenders tend to advertise typical APR.  Typical APR is the rate they offer to 66% or more of their customers, and is not necessarily the APR they offer everyone. For example, there are personal loans available on the market to people with poor credit history.  It is more difficult to obtain a personal loan in these circumstances, and it is likely you will be charged a higher interest rate.  Other things to consider before applying for an personal loan are what you realistically need to borrow for your purposes, and what you can afford to repay.