Personal Loans are a popular and recognisable form of borrowing, with customers using personal loans for a range of needs ranging from luxury items such as cars and holidays to essentials such as home improvements.
Trying to stretch our monthly income to splash out on large-scale purchases is often beyond most average earners. Therefore, we use personal loans to enable us to buy items and pay back the amount, including interest over a period of time.
Personal loans differ from similar forms of borrowing such as credit cards and overdrafts in their use of fixed amounts, over a fixed term and often with fixed rates of interest. Amount limits are usually set at £25,000 which means no security is needed unlike secured loans which require you to use your house as a secure asset but allow you to borrow larger amounts. Loan terms are typically one to five years, with lower repayments when stretched over a longer period of time, however, your credit history will also affect your repayment rates, with poor credit rating likely to lead to higher interest rates or flat out refusal.
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