You can typically borrow up to £15,000 for anywhere between six months and 10 years depending on the state of your personal finances.
Loans may be secured or unsecured
Secured loans, like mortgages, are loans secured on a property, which means you might have to sell your home if you can't keep up with repayments.
An unsecured loan is available to non-homeowners and the loan is not secured against any of your assets. Instead, an unsecured loan provider will base their decision on granting you a personal loan by using your personal credit history. This is verified by a credit check to determine your credit rating.
However with an unsecured loan if you default on your repayments you could end up being credit blacklisted. This could prevent you taking out new credit cards, a mortgage or even taking advantage of an interest-free deal in a shop.
How to compare different loans
To get the best deal you should shop around. In general, the more you borrow, the lower the interest rate will be, however rates currently vary from around 7.
In order to take out a personal loan you don't have to go to a bank or building society, there are many good deals available through supermarkets and other providers, so shop around.
You will need to be particularly careful the annual percentage rate offered by the various lenders as they may calculate APR in different ways. So when comparing APR, make sure that you're comparing like with like.
Repayments
Loans are repaid in monthly installments over an agreed period of time. This term is usually fixed and if you want to pay off the loan earlier you may well have to pay an early settlement penalty.
If you think you may want to repay the your loan early then there are flexible loans, which let you pay back money whenever you want. These are becoming increasingly common but interest rates on these loans are often higher.
No matter how good the loan deal, the longer the repayment period, the more interest you will pay, so go for the shortest one you can manage.
At the end of the day the most important thing is to make sure you know exactly what the monthly repayments will be, and how much you will be paying back in total.
