Will I be charged an early repayment fee if I pay my personal loan off early?
This will depend on the loan company and the terms and conditions of the product you have. Generally, you will have to pay a penalty unless you have a flexible loan (see below) which allows you to repay the amount outstanding early without incurring an early repayment fee.
How do I get the best loan deal on the market?
Use a Best Buy table to compare loans and then a loan calculator to work out your repayment levels. The best product for you is the one that does the job best for your circumstances, so make sure you do your research thoroughly.
I want to go on a three-week holiday of a lifetime to the West Indies. Is a personal loan the right product to fund the trip?
If you haven’t saved the money to pay for the trip outright yourself then holidays are a legitimate purpose for which to apply for a personal loan UK. Just make sure you are able to make the repayments on the loan once you have taken it out – and enjoy that trip!
Is it best to get a loan for one year, three years or five years?
This depends entirely on your circumstances, but it is worth noting that the interest rate on longer term loans is often lower than on the short-term products, as the loan companies need to make a profit like any other commercial business. However, you will end up actually paying more interest on a ‘cheaper’ rate five-year loan, for example, as the longer repayment period will increase the total paid back to the provider.
I’ve seen that the supermarkets are offering personal loans. Are these better than those on offer from banks, building societies and so on?
Usually you will find that they are loans from banks, once you peel away the supermarket label. Tesco Personal Finance, for example, is a joint venture with the Royal Bank of Scotland, while Marks & Spencer financial products are offered in association with HSBC, with both companies having a 50:50 stake in the venture. The supermarkets, however, are reputable providers with good experience in the market, but you should still compare loans to make sure you pick the best deal.
If I take out a loan and default on the payments can the loan company take my house away?
If you are already asking this question then a loan is probably not the right product for you. If you default on an unsecured personal loan your home is not usually at risk, but you will acquire a bad credit record which will adversely affect your chances of getting credit in the future. Never borrow money if you have even the slightest suspicion that you will struggle to repay it.
I’ve been thinking of getting a loan from a company advertising in the back pages of a tabloid newspaper. I’ve never heard of it before and it seems to be a small firm, so is this a good idea?
Almost certainly not and you would be better off to compare loans from reputable providers (like the banks and building societies) with a proven track record in the industry. Some, although by no means all, of the firms advertising in the back of the tabloids are little better than moneylenders in the worst sense of that word.
I’m self-employed with an irregular income. Is there any chance of a personal loan for me?
Yes, of course there is, in the shape of flexible loans. These products permit variable payments to allow for fluctuations in your income, although you will find the interest rate charged will be higher than with a standard personal loan UK. Of course, you should always compare loans of the flexible variety, as you would any other.
Is a personal loan the same as a secured loan?
No, it isn’t. A secured loan is secured on your property, which is what the word means in this context, while a personal loan is unsecured. If you default on a secured loan your property is at risk and you should always go into these deals fully aware of the implications.
Will the personal loan companies check me out if I apply to them for a loan?
Of course they will. They have to be sure of your creditworthiness and that you can afford the repayments. They will run credit checks and will need to see documentary evidence that you are who you say you are and that you are actually earning the income stated on your loan application. Never lie on a loan application form, as it will jeopardise your chances of getting the loan.