But before taking out a personal loan, it’s worth taking some time to understand how they work and what the charges are. This way you’ll be able to ensure it’s the right option for you and can avoid any unexpected costs down the line.
Here are some of the key elements of a personal loan:
you can spread your repayments over one to eight years, but the longer you take to pay back your loan, the more interest you'll have to pay
Here are some of the key things to consider before taking out a personal loan:
Arrangement fee – this is an administration fee that is charged by some lenders for arranging your personal loan.
Late repayment fees – if you miss a repayment under your loan agreement, you may be charged interest on the overdue amount, as well as any administration fees from the lender.
Early repayment charge – some lenders may charge a fee if you pay back more than your fixed monthly repayment amount.
When you take out a personal loan, you must factor in the total loan costs – the amount borrowed plus interest accrued over the repayment period.
Your loan agreement will detail how much you have to pay back and when. This is usually a fixed minimum fee per month.
The amount you can borrow on a personal loan depends on your needs, income and credit score. The better your credit score, the more chance you have of being approved for a loan and receiving a lower interest rate.
Use our personal loan calculator to see what the monthly repayments could be on your loan.
