Personal Loans Explained
Whatever you want a loan for, if you’re looking to borrow money and pay in monthly repayments, a Personal Loan could be just what you’re after. Unlike a Secured Loan, with a Personal Loan you don’t need to put your house or any other asset against it. You can generally borrow more than you could on a credit card, and you’ll have a regular loan repayment to make each month.
You agree with the lender to repay the loan over a fixed time period. Loan terms can vary but typically they fall between 12 and 60 months.
How high are Personal Loan interest rates?
This will depend on several things, including the total amount of the loan you want, as well as on your own situation, for instance your credit history and credit score.
How much will I be able to borrow?
The total amount that you’ll be able to borrow on a Personal Loan is always ‘subject to status’. This means, it depends on both your situation as it is now (for instance, your outgoings), as well as your credit history, as shown on your credit score.
What if I’ve got a poor credit rating?
If you’ve already applied for a loan and been declined, you might still be able to get one if you try another lender. At Better Chance Finance we believe that a poor credit history shouldn’t mean a bleak credit future – and some of the lenders we work with actually specialise in finding better loans for people with a poor credit score.
How soon can I find out if I can get a personal loan?
Some lenders are able to give an instant decision, whereas with others it might take up to a few weeks.
What are Representative APRs?
A Representative APR, means that at least half of customers receive a rate that is the same as, or lower than, this figure. So, as a general rule you’re looking for a loan with a lower representative APR, as this usually means there’s a better chance that you’ll be paying less than with a higher one.
A Maximum APR, is the maximum rate you’d be paying back at. When you give a lender your details, they work out what your APR would be on a certain loan, based on your situation and credit history – this is called your “Personal APR”, as it’s specifically for you.
Will I have to pay a fee for a personal loan?
This depends. Some lenders do charge an administration fee for setting up the loan, and this might be asked for upfront, or added to the total amount for you to pay back. Ask your lender, and make sure you check the Terms and Conditions, so that you don’t end up paying for any hidden costs.
What is a fixed rate?
If you’re told that a Personal Loan has a fixed rate, it means that it has a fixed rate of interest. This means that your loan repayments will not change from month to month, for the whole time that you’ve got the loan. Fixed rate loans are a good option if you want to borrow money and know what you’ll be paying back each month.
What is a variable rate?
As the name suggests, a variable rate Personal Loan means your interest rate might change during the time that you’re paying off your loan – this could potentially mean that you’d end up paying more or less in terms of the total amount, and so it’s not as good if you need to budget carefully.