Personal Loans can be a useful tool to consolidate debt, make a large purchase, plan for a holiday and more. Quite simply, you can apply for a loan from your bank and for a small fee in interest, can quickly get cash in hand. A personal loan can also be called an unsecured loan, and this means that that the lender has not required any collateral or security for the loan, should you become unable to pay it back
Nowadays loans are available from anything ranging from £500 up to £25,000. Although each loan provider will have different repayment structures, they usually range from between 6 months to 10 years.The interest charged by lenders (on the amount borrowed) tends to be fixed at the start of the loan, but may vary later on. Repayments therefore remain the same throughout the term specified, but can change once the term has expired.
Banks and other lenders earn money on loans by asking you to repay the full value of the loan plus interest. The interest charge is measured as the APR (Annual Percentage Rate) and is the amount of interest you will pay in a 12-month period. The higher the APR, the more expensive the loan.
The APR you will pay depends on two key factors. Firstly, the amount of the personal loan and secondly the length of term. Simply speaking, the best rate for one personal loan amount (Eg £5,000 over two years) may not be the best rate on all.
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