Personal loans are usually bigger than your credit card limit but less than your mortgage.
They can be taken out for virtually any reason you like. The lenders like to know but it really doesn’t matter if it’s for cosmetic surgery, a holiday or a new car.
Personal loans are usually taken out over 1 to 7 years.
Interest rates vary considerably depending upon your credit rating and relationship with your bank or lending institution.
If you are borrowing to purchase a new car and are willing to secure the loan against the car then you should get a much lower rate. The difference between a secured and unsecured loan can be as much as 10%.
However this might seem like a massive difference but due to the very short time frame of most loans this isn’t as bad as it might seem. Just play around with the interest rates in the loan calculator above to see the repayment differences.
Types of lenders
Lenders vary from the big 4 banks, smaller banks and credit unions to more specialised finance corporations.
As well as paying interest on the loan you will also typically have an initial application fee and ongoing monthly account fees. Each lender has different fees and you should watch this closely when comparing.