Loans

A personal loan allows you to borrow a fixed amount of money over a certain period of time. This loan will then be paid back, usually at a fixed rate, over a set period of months. A personal loan usually offers between £1,000 and £36,000. Customers can use this loan to purchase a new car, do some home improvements or to help with debt consolidation.

What is an unsecured personal loan?

An unsecured loan is exactly the same as a personal loan. With these types of loans, you don’t have to offer up any kind of collateral (e.g. your house) as a guarantee in order to get the loan. While this could mean less risk to you when borrowing the money, unsecured loans tend to have higher interest rates as a result.

A loan like this can be used for a number of different reasons. One of the more popular choices is to help with the purchase of a new car. You also may want to use the loan to consolidate your debt or even to pay for your wedding. Whatever you may need the money for, a loan is one way to get the amount you need quickly and easily at a rate you can agree on.

Personal loans typically offer between £1,000 and £36,000, and could be used for purchases such as a new car or some home improvements. They also give you the flexibility to pay back the loan over a number of years.  Most unsecured loans have a fixed interest rate, which means that repayments will stay the same throughout the term.

• Before you apply for a loan, take some time to work out how much you want to borrow and how much you can afford to pay back monthly. Before deciding on a loan, it's worth taking your income and expenses into account to be sure you can realistically make the repayments.
• Depending on your credit rating, you may be offered a different interest rate (Representative APR) or be limited to a certain amount that you can borrow. Compare loans without affecting your credit score and get approval in three minutes. 
• You may also be asked for proof of address and proof of earnings to support your application, so be sure to have these to hand.

If you’re not sure how best to fund your car, it may be worth looking at the different types of car finance available. These include:

• Hire purchase – Hire purchase, a type of secured loan, usually requires a 10% deposit followed by monthly payments. You hire the car until your final payment after which you own the car.
• Personal contract purchase – PCP is quite similar to hire purchase but requires a ‘balloon payment’ at the end of the term in order for you to own the car outright. You also have the option to give the car back and start a new PCP deal.

You can learn more about your options by reading our finance explained article or by heading over to our car finance guides hub for more in-depth, expert knowledge.