(Q). What is a personal loan?

(A). A personal loan is an amount of money that you borrow from a bank, building society or some other lender. Normally, you'll receive a lump sum. In return, you agree to make regular repayments, usually monthly.

(Q). In what circumstances should I consider taking out a personal loan?

(A.) If you're looking to borrow money over a period of between one and five years, a personal loan could be right for you. To decide on what sort of credit is appropriate to your circumstances, you should consider a number of factors. Ask yourself how much you want to borrow? Over what timeframe?

(Q). Is finding the lowest interest rate most important or should I go for convenience and use my credit card?

(A). Personal loans interest rates are generally cheaper than those on credit cards. A personal loan can be the best bet if you have a number of debts that you wish to consolidate into one loan. In doing so, you ought to be able to simplify your affairs and often reduce the overall cost of credit. If you are looking to spread a cost over a set period a little time spent now should pay dividends over the term of the borrowing.

(Q). If I decide I need a personal loan, which type of lender is best?

(A). Banks, building societies and specialist finance companies all offer personal loans, none is best in any outright sense. The market is competitive and you will need to shop around. Different lenders have different preferences when deciding which borrowers to take on. As a borrower when you're considering one deal with another, make sure you're comparing like with like. The interest rate to look for is the Annual Percentage Rate (APR). This can be a helpful starting point in determining the real interest rate you'll face over the term of the loan but treat the figure with care. For example, does the APR include things like credit insurance on one loan but not on another?

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(Q). What interest rate will I pay and is it negotiable?

(A). Interest rates vary. And it is also worth bearing in mind that some lenders are only interested in lending to people whom they regard as a "safe risk". These people may secure lower interest rates. This "cherry picking" by lenders means that groups considered a less good risk are either offered money at a higher interest rate or not offered a loan at all. If you do your homework and get several alternative quotations you should be able to reduce the cost of credit. And you may be able to negotiate the interest rate you pay. Beware, some categories of people are less welcome to certain lenders. Self employed people with a short trading record and those who don't own their own home might be declined or charged a higher interest rate. Lenders vary in their approach. They'll want to ask personal questions about your finances and your future plans before making up their mind on whether to lend and at what interest rate.

(Q). What can I use the loan for?

(A). Many people pay off other loans and credit cards to have just one low cost loan. They make purchases, home improvements etc. You can use the money for almost any purpose with most lenders unless it is purpose specific e.g. a car loan.

(Q). How long will it be until I have the money?

(A). Approx. 14 days, due to the cooling off period stipulated under the Consumer Credit Act this is the shortest legal time, possible.

(Q). Can I protect my repayments from Accident, Sickness and Redundancy?

(A). Yes. Low cost insurance can be arranged to cover your repayments, a small price to pay for the peace of mind it gives, most people find.

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(Q). I am Self - Employed, can I apply?

(A). Yes, you can apply here UK personal loans.There are lenders that specialise in loans for the self - employed and those starting in business with limited trading accounts.

(Q). If the lender declines me, do they have to tell me why?

(A). Strictly speaking, no, but most lenders say they do tell applicants, in broad terms why their application was rejected. Most lenders use a system of credit scoring to decide whether you're a good enough risk. Lenders are bound to tell you whether they sought information from a credit reference agency.

(Q). I have had some mortgage, loan arrears, can I apply?

(A). Yes, you can apply here UK personal loans. Some of our lenders are sympathetic to these cases.

(Q). If I have been taken to court about a previous debt, am I blacklisted?

(A). If you have a court judgement against you, this doesn't help. Many lenders won't consider you but there are some that will. They will want to look closely at the circumstances of the previous loan default. Your present financial situation will also play a key part in the decision making process. Be honest about your past, present and future finances as some lenders are sympathetic.

(Q). What about the "small print" when taking out a personal loan?

(A). Once you're satisfied that taking out a personal loan best suits your circumstances, make sure you understand clearly the conditions you'll have to comply with and all the associated costs. You are legally entitled to a written quotation - be sure you get one. With all personal loans written under the Consumer Credit Act you can cancel shortly after you've signed - so check. Make sure you understand any penalties that you may be liable for if you want to repay early because these penalties can be costly.

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(Q). I have been told that I was "refused" a loan because of information held by a credit reference agency. What can I do as I don't think the information is correct?

(A). See our section on Bad Credit Loans

(Q). What happens if I can't meet the loan repayments?

(A). Talk to your lender at the earliest opportunity, they can't help if they are not aware of your circumstances. They will want to consider carefully your individual situation. If they reasonably believe your financial situation may improve, they may be prepared to suspend loan repayments for a while or extend the term of the loan. Your lender will want to determine whether you "can't pay" at this time or whether you simply "won't pay". In the final analysis, they can insist on the debt being repaid. If your loan is secured on an asset such as your home, you could be forced to sell it to repay the debt. Even if the loan is not "secured" on a specific asset, the lender could nevertheless sue you to recover the debt. If you lose, the result could be the same - you have to sell your home.

(Q). Can I repay the loan early?

(A). Yes, a full rebate will be given on any interest outstanding calculated in accordance with the Consumer Credit Act 1974.

(Q). Can I repay more than the agreed monthly instalment?

(A). Yes, if you do it will reduce the amount of interest you will repay and shorten the period of the loan. This is only available from certain lenders, check what rules the lender applies before you buy if you are likely to want to increase your payments.

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