Personal Loan
To take out a personal loan is to borrow money from a building
society, bank or other financial service provider. You can usually
borrow up to the sum of £15,000 for a period of time that
can run from six months up to 10 years. By and large, the larger
the amount you borrow, the lower the interest will be, but rates
do differ between lenders, from around 8% to 20%. The situation
is not made easy by the fact that it is difficult to compare
personal loan rates due to different lenders calculating the
total cost of their loans (known as the annual percentage rate
or APR) in different ways.
What’s in a loan?
Personal loans can be secured
or unsecured. Secured
loans are usually tied to your house; unsecured loans are
not tied into anything. Loans for specific items such as new
cars are also available, often with lower interest rates. If
you're taking out a loan for a car, tell your lender.
Most loans are re-paid by monthly instalments and the repayment
period will be agreed before you get the money. This is usually
a fixed period and you will have to pay a redemption penalty
- an example being two months interest - if you want to pay
it off sooner. The longer the repayment period, the more interest
you will be paying, so go for the shortest one you can manage.
Flexible loans, which let you
borrow and pay back at will, are becoming more common, but the
interest rate charged is often notably higher.
Why take out a personal loan?
There is no shortage of companies willing to offer an unsecured
personal loan. But tread carefully. While there are a few providers
who have been coming up with more flexible products lately,
personal loans often mean tying yourself into paying back a
large sum over quite a long period, with penalties (usually
a fee of one or two months' interest) for clearing the debt
early.
The most important thing is to make sure you know exactly what
the monthly payments will be, and how much you will pay back
in total. For the simple, fast and free option why not fill
out our loan form today.
Shopping around is the key, and you can do this all under one
site here at UK Loans. Check out this months top
ten personal loans sites here.
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