What exactly is a personal loan?

A personal loan is a lump sum advance from a loan provider to you. You can choose over what period of time to repay the loan, in monthly instalments. Personal loans can be secured, or more normally, unsecured. The secured element relates to whether the repayment of the debt is backed by some other asset, usually your home. For unsecured personal loans, the shortest repayment period is 6 months, with the maximum 120 months, although not all providers will have this range of terms available. For secured loans, the maximum term mirrors that of mortgages and other loans secured on your property, with a maximum of either 25 or 30 years. The loan provider makes money by charging you interest, which is added to your loan repayments. All personal loan providers also offer payment protection insurance. This insurance allows for repayments to be continued should you have an accident, sickness, or become unemployed. The loan provider makes money on the commission from the sale of this policy to you. You do not have to take this insurance to take the personal loan.

How do personal loans work?

Once approved, the money is deposited in your account either electronically, or via a personal cheque. You agree to make regular monthly repayments until the full value of the loan capital, plus any interest, has been repaid. Most personal loans are at a fixed interest rate, which means that the interest rate you are charged, and by definition the repayments, do not vary over the term of the loan. The most common, and simplest way to ensure you keep up with repayments is to set up a direct-debit from your current account to the loan provider, which minimises the chance of you missing a repayment.

How am I protected?

Personal Loans are governed by the Consumer Credit Act. The Act contains strict regulations about how money is lent and covers loans up to a value of ?000. When taking out a personal loan you will be asked to sign a credit agreement. Read this through carefully before you sign, as you will be bound by its terms. Some loan providers offer insurance policies or payment protection schemes to protect you in the event of accident, illness or redundancy. However, cover may vary and you should check with your individual loan provider what a particular policy or scheme covers, or more importantly, excludes. If you do have difficulty making your repayments, seek advice from your loan provider immediately. The earlier the better and the more sympathetic they will be. Alternatively, you can seek advice from a voluntary organisation.

How do I get a personal loan?

It? easy! Just complete the following 4 steps: 1. Enter your loan requirements including loan amount, term and a few basic questions about yourself. 2. Personal loans that match your requirements are presented to you in table format enabling you to easily compare different loans. You can view specific product features of each loan by selecting the details button. You can even interactively search for a loan based on features most important to you by selecting find the right loan for me?. 3. Apply for a loan by selecting the apply button. You will then be asked to complete an application form that is then assessed by the loan provider. 4. The loan provider will then notify you of the success of your application. If you happen to unsuccessful with your application feel free to try another loan provider present on our marketplace.

How can I be sure that I make the right choice?

Our unique selection process can objectively guide you through the decision-making process and provides a list of loans, which match your requirements. For example, you will be asked for your preferences relative to different loan features, such as typical APR, monthly repayment and brand. You will then evaluate a series of hypothetical loans and make trade-offs between different loan features. After comparing these features, you will be presented with a list of your top ten loans based solely on your preferences.

Does applying for a loan affect my credit status?

Yes. Every time you apply for a loan, an inquiry is made as to your credit status. This inquiry is noted with the respective credit agency. Although these inquiries will remain on the report for approximately one year, loan providers will be primarily concerned with the number of inquiries over the last 6 months. Loan providers do become concerned if there are more than 10 inquiries during that time. They interpret this as an indication that you are badly in need of credit, and thereby consider you high risk. As a result, they will be less likely to grant you the loan you are applying for. It is therefore important that you do not apply for an excessive amount of loans unless absolutely necessary.

I've had credit problems. Can I still qualify for a personal loan?

There are some loan providers on our database who are willing to consider applications from people who have had credit problems in the past. Often they will require that a secured loan be taken out, which improves the risk from their perspective. In addition, interest and other charges are often higher, again reflecting the increased risk. If you are in this position, while using our Compare and Contrast loan search engine, select the CCJ/Arrears specialist lender as being an important loan feature for you. This will help us find lenders who provide this service.