Frequently Asked Questions (FAQ's)

Are there any borrowing limits?

With an unsecured personal loan you can normally borrow up to £15,000 - but some lenders offer up to £25,000.

What are the loan repayment terms?

With an unsecured personal loan, you can normally borrow the money over a period from 12 months to 7 years, although some firms will lend for a short period of 6 months and others will allow you to repay over 10 years. Most lenders will insist that you take out a direct debit for the repayments.

Will the interest rates go up or down on a loan?

Interest rates are generally fixed for the duration of the loan, which means you know exactly how much you will repay each month. That means if you are offered a loan at 6.9% APR, you will be charged that rate of interest for the entire repayment period, regardless of any rise or fall in the Bank of England base rate.
The important number to look for is the APR, the annual percentage rate. The higher the APR the more you will have to pay in interest charges.

I want to pay-off my loan early. Can I do so?

If you want to repay your loan in full before the end of the repayment period, lenders will normally charge you what is known as an early repayment penalty. For example if you borrow £5,000 over 5 years and at the end of the 2nd year you want to pay back all the money outstanding, lenders would normally charge a penalty of no more than two months' interest. The penalty charge is to compensate the lender for the reduced amount of money they would have made in interest as a consequence of you repaying the loan early.

What is Payment Protection Insurance (PPI)?

PPI is optional insurance that covers your monthly loan repayments if you cannot work because of accident, sickness or unemployment. This protection is often expensive and you should think carefully whether you really need this cover or not.

Do lenders carry out credit checks?

Lenders will check your credit history to make sure that you are a good risk and do not have a history of bad debts and defaults on loan repayments. To do this they will check your credit history with a credit reference agency such as Experian or Equifax. A poor credit history won't necessarily prevent you from getting a loan, but you will probably won't have access to the lowest interest deals and will have to pay a higher rate of interest. If you are self-employed or are on a short-term contract you may find it more difficult to be accepted for the most competitive unsecured loans.