go back

Personal Loans

Unsecured Personal Car Loans

An unsecured loan is not secured on any assets, so if you don’t pay, your home is safe. If you want to borrow anything over about £1,500, or simply want to keep your credit card free from a debt that never gets paid off, an unsecured personal loan may well be right for you.

They are usually available from £1,000 to £15,000, with the length of repayments typically between 12 and 36 months. The APR will generally be fixed. The loan amount cannot exceed £15,000 and the APR will usually be higher than for a secured loan.

Secured Personal Loans

This type of loan is really best used for very large purchases (over £15,000) and, in most cases, where the loan adds value to your home or you want to pay it off over a long period of time.

The rates tend to be much lower than unsecured personal loans, as the bank reduces its risk by securing the loan against your home. This means that if you don’t keep up repayments the bank can repossess your home.

Bank overdraft

As a short-term measure, a bank overdraft is the simplest way to borrow money. Before taking out an overdraft, check your bank’s Annual Percentage Rate (APR) as it could be expensive. Agree your overdraft with your bank – they will charge you more if you overdraw without making an arrangement first. Your bank may want you to meet certain conditions and they should make these clear at the time.

Credit cards

A credit card is another easy and flexible way to borrow small sums of money (up to about £2,500). But take care or it could work out very expensive.

Make sure you:

Leave yourself enough credit limit to accommodate your regular spending
Find out exactly what you’re paying interest on – most banks will charge you for the entire month’s balance if you don’t clear it
Always pay off at least the minimum balance each month. If you don’t, your bank could charge late payment fees
Don’t rely on paying the minimum balance every month – if you spend up to your limit and then just pay off the minimum, it could take up to four years to clear the balance!
Find a credit card offering a low interest rate
Be aware that some cards start out with a low interest rate (or even 0%) to tempt you and apply a higher rate after a year or six months

It is your resposibility to understand all the implications of the contract you are entering into with any lender.