What is a personal loan?

What is a personal loan?

Personal loans are flexible financial products designed to allow the borrower freedom and control with regards to how much they borrow and how long they take the amount over. UKLoans can help customers to find tailored personal loans from £1,000 to £25,000 through a simple three step application process.Whether borrowing for home improvements, tying the knot, your dream car, the holiday of a lifetime or simply to consolidate existing debts; personal loans can typically offer lower rates and a more manageable repayment structure than other forms of finance such as payday or short term lending.

 

Through our application process customers can apply for a long term ranging from 1 – 60 months through filling out one quick form. After submitting your details UKLoans’ award winning loan matching technology shall analyse and order the best lenders for you, based on the information you have provided us with. When completing your application, customers are reminded of the importance of providing UKLoans with honest and accurate information as it could alter the order in which lenders are presented with your loan application.

 

When ordering the personal loan providers currently on our carefully selected panel, UKLoans shall always allow the lender with the cheapest APR% for you as an individual customer to see your details first. This gives our customer the most realistic chance of being accepted for a product that suits them, with a manageable annual percentage rate.

 

Typically speaking there are two types of personal loans unsecured and secured. A secured loan requires the borrower to provide an asset as collateral. This would normally be the customers’ house if they are a homeowner, or a property registered in the customer’s name where they are the mortgage payer.

Unsecured Personal Loans

Unsecured loans are usually more expensive than those where no security is offered. However, they can be very useful in situations where it is inconvenient, too costly or impossible to arrange secured loans. As some examples these situations could be purchases of small value, you are not a homeowner as you rent your property or the value of the property you own does not exceed the value of your mortgage.

 

Lenders will offer unsecured loans to people who they think are low risk. The types of factors they take into account include whether the borrower has a good credit history, has lived at the same address for a long time, is in a secure job and has a regular monthly income amongst other criteria.

Secured Personal Loans

Secured loan products are a loan only available to property owners, with a mortgage, where the lender can forcibly sell your house to reclaim outstanding amounts if a client can’t repay. The money is loaned against the equity the client holds in the property. The equity is the difference between the outstanding mortgage and the property value. The ‘secured’ bit means the lender gets ‘security’ not the client, as if there are problems, it can repossess the property. They can also be called a second mortgage, homeowner loan or second charge.

How much will a Personal Loan cost to repay?

Repayments on a personal loan will take into account several factors including your personal situation; this is how your individual APR% will be calculated (have a look at our Loan Calculator). Therefore UKLoans cannot state or guarantee how much repaying your loan will cost until your application form has been submitted and accepted by a finance provider on our panel.

 

What our customers can use as an indicative example however is the representative annual percentage rate (RAPR) that is displayed next to all loan products, regardless of credit status. In the United Kingdom all companies offering financial products directly or serving as a broker in these situations will always be required to present an RAPR% for customers to make informed decisions about the credit they may go ahead and loan. RAPR% is always intended to only be a representation of what 51% of customers could expect to be charged as interest on their loan amount, the final APR% a customer is quoted may be higher or lower than the RAPR% given.

 

Are there late/early payment charges?

The policy regarding charges to your loan will differ greatly depending on the lender who has accepted your application. These differences will be apparent in the amount charged and also the circumstances that will result in charges being added to your loan account.

 

In most cases, if you are late making a repayment on the amount you have borrowed the company that has funded your finance will add a late repayment charge onto your account with them. This type of penalty can range from £1 – £100 and should be outlined in your loan agreement before you electronically sign for your amount.

 

Additionally, with monthly repayment personal loans sometimes there could be a charge for repaying what you owe earlier than originally agreed. When looking into the cost of personal borrowing customers should always consult the loan agreement and personal terms and conditions of loaning before signing.

 

The majority of personal loan lenders working with UKLoans do not charge fees to repay any outstanding amounts before the final agreed termination date. In fact early repayment, in full or in part, is often encouraged within the customers’ best interests. You should only be liable for the repayment of any interest that has accrued on the balance, plus the principal amount loaned. Some of the personal finance companies working with UKLoans will either reduce the payment term or monthly repayment amount (in proportion) should you choose to make a voluntary additional payment.

Use our award winning technology to search our panel of lenders for some of the most competitive rates.