Are you currently looking at your phone or your computer? Are you wondering how you can afford all the wants in life without a year or even more of saving up? Personal loans might be the answer you’re looking for!
What are personal loans?
A personal loan is something which a person borrows for a fixed period of time. They are repaid in smaller monthly instalments. Usually, they range from around £1,000 to £25,000. But a few lenders and brokers like LoanPig could offer you one up to £1500. As the borrowing amounts tend to be high, most lenders and brokers offer longer repayment periods to ensure you can comfortably repay the loan and have a stress-free experience. So, the repayment periods can range from around 1 year to 6 years, but that can also depend on how much you borrow and your personal financial position.
What can I use a personal loan for?
Personal loans are not only flexible on the amount and the repayment, but also their purpose. As they are personal, you can spend them on anything you like (within reason). Some lenders might ask you what you are spending your loan on whereas others might just leave you to it if they believe you will repay it at no risk. People tend to borrow personal loans for things which cost that extra bit. Here are some of the most common examples, but, these aren’t everything you can use them for:
- Home DIY
- Debt Consolidation
As you can see, all of these examples are things which most people can’t just fork out of the bank without seeing a significant change. For example, the average cost of a wedding in the UK is £25,000. This isn’t an amount that everyone has to just splash out and pay for all at once, therefore, in cases like this, a personal loan would be a good option.
As well as this, I’m sure you’re wondering what you can’t spend a personal loan on. The main things are as followed:
- To pay for a house or business
Am I eligible?
The criteria from lender to lender tends to vary, but only slightly. One lender might have the minimum age of 18 and another may have it at 21. Other than the small things like that, most follow the same structure. For example:
- Be over 18 years old & a UK resident
- Have a bank account and an active debit card
- Be in permanent employment or receiving various allowances
- Meet our credit and affordability criteria.
- Agree to provide accurate information about yourself and your financial situation
Should I use a lender or a broker?
Firstly, before making this decision you need to be aware of the main differences between the two. Lenders lend directly to you, whereas brokers are there to find you a lender. They don’t actually lend to you first hand. You might be thinking, why would anyone use a broker and not a lender, but, there are plenty of reasons why brokers might be better.
A broker is there to do all of the work for you. All you have to do is submit one application to a broker and then they will send your application to multiple lenders to give you a higher chance of being accepted and getting your loan. This can be seen as far better than a lender as you might have to complete multiple applications to different lenders if you get rejected, which takes up a lot of time.
Read our blog on paying in cash here.