A Quick Guide to Personal Loans

Most banks and finance companies will lend money to a someone with a good credit history and a regular income.

A homeowner can more easily get a personal loan, known as a secured loan, because the value of the property is used as security.

A personal loan must never be used for business purposes.

The bank will need to know why a loan is required. Money may be needed to buy a new car, to make home improvements, to travel abroad or to purchase some important household item.

The amount the bank will lend depends on how much the borrower can afford to pay back each month plus interest. Usually there is a minimum and maximum amount the bank will lend, from a few thousands upwards.

A personal loan will have to be repaid over a certain number of years. The longer the term of loan the lower the amount paid back each month. The length of the term will be worked out between the bank and the borrower, based on the amount of the loan and the borrower’s income and monthly expenses.

The maximum size of loan available to an individual may be restricted by the bank or finance company. The amount of interest payable will depend on the number of years it will take to repay the loan.

Anyone requiring a personal loan can enquire at the bank where they already have a account, but it is a good idea to look get some independent financial advice and check out a few financial websites, to see if a better deal can be found with a different bank or a specialist loan company.