UK Personal Loans

Seven simple steps to the perfect personal loan!

Although personal loans are, at first glance, relatively simple products, the devil's in the detail! Then again, armed with the following advice, you should be confident of finding a loan that's right up your street.

1. Remember that a personal loan is generally unsecure, unlike a mortgage which is secured on your house. Without security for the loan, you get charged a greater rate of interest.
2. The bigger your loan, the more interest you pay, so borrow the absolute minimum that you need! Also, the longer it takes you to repay the loan, the more it costs you! Keep the repayments affordable, but go for the shortest possible repayment period for your loan.
3. Personal loan interest rates are generally fixed. If you do go for a variable loan, make sure you can afford an increase in repayments in the future should the interest rate go up.
4. Watch out for APRs (Annual Percentage Rates), and don't take them as an absolute measure as to the cheapness of your loan. Lenders have a few ways to massage the APR to make the loan seem cheaper than others!
5. Typical APR is not necessarily the rate you will get. 2/3rds of borrowers (67%) must be given the advertised typical rate, but you might not get it if you have a dodgy credit history, or you don't fit a lender's customer profile.
6. The best comparison for personal loans is the 'Total Amount Repayable' (TAR). This takes into account every last penny you will repay, and so is a better measure for comparison of loans. Down with APR - go with TAR!
7. Shop around! The lenders are desperate for your business, so look on the high street, look online, look in the newspapers. If you don't see the deal you want from the lender you want - try haggling! Many lenders will do a deal to secure your business!