UK personal loan companies – Who is right for you?

Personal loans are for people who want to borrow a lump sum for a variety of reasons. This could be to buy a car, pay off other debt, a holiday of a lifetime, home improvements or for education. Personal loans can be spent in any way you wish, over a varying time frame and at a lower interest rate than other lending, such as credit cards.

Personal loans do not require any security (e.g. your home) as they are unsecured. They could be the right choice for you if you are looking to borrow money for between one and five years, particularly if you are looking at debt consolidation.

As a rule you can borrow up to fifteen thousand pounds with an unsecured loan, although some UK personal loan companies will let you borrow as much as twenty five thousand pounds.

Some UK personal loan companies will let you borrow the money for as little as six months, although most will lend it you for a minimum of a year. The maximum repayment period is around seven years, although some lenders may let you repay your loan over ten years.

Some examples of personal loans are as follows (Rates might have changed since this article was written):

  • Sainsbury’s Shopper Personal Loan will lend you anything from £7500 to £15,000 over a period of four years at an interest rate of 6.2%. If you borrow £10,000 for example, over the term of the loan you will have repaid £11,280, having paid £1280 in interest.
  • Platinum will lend you between £10,000 to £15,000 over five years for an interest cost of 14.5%. For a borrowing of £10,000 the total amount payable will be £11,608, with £1608 of that being interest.

These are examples of personal loans available for people with a good credit history.  If you don’t have a good credit history then the cost of personal loans is higher.  For example for those with a fair credit history – Ocean finance will lend you £10000 over four years, making payments of £256.38 per month. The interest rate is 13.7% and you will have paid £12,306 at the end of the term, including £2306 of interest.

If, for whatever reason you have a poor credit history then the loan will be more expensive. For example – Central Capital Secured Loan will lend you £10,000 over five years at an interest rate of 17.4% variable. This means you would repay £13,678 over the term having paid £3678 in interest.

As you can see the amount you have to repay varies considerably.  If you have a poor credit history then it will undoubtedly cost you more, but if you have a good credit history then personal loans can be a good choice.

Leave a Reply