Whether you’re looking to make some home improvements, purchase a new car or you’re wanting to consolidate some of your debts, a personal loan could provide you with some much needed cash injection but how much can you borrow – and just how easy is to take out this type of loan?
The answer will actually depend on a number of factors but will mostly be based upon your credit history and your ability to pay back the loan. Let’s take a closer look…
How much can I borrow?
Personal, unsecured loans usually range from £1,000 to £25,000, although some loan companies may extend this up to £50,000. The exact amount you’ll be able to borrow will usually depend on how much the lender thinks you’ll be able to repay and whether or not you are a reliable borrower.
With this is mind, your credit rating is key.
Unlike a secured loan, with which your property is used as collateral, a personal loan is unsecured, meaning that your lender does not have any back up when it comes to the loan being repaid. So instead they’ll rely on your creditworthiness to make their judgements on whether they should lend to you, and how much they are able to offer.
I have a good credit score; will I get a personal loan?
If your credit history shows that you are a responsible borrower and you can easily afford to make the required monthly repayments then you shouldn’t really have many problems when applying for a loan. Whilst personal loans tend to have higher interest rates than secured loans, borrowers with good credit should make it easier to find a low APR loan.
What if my credit rating is poor? Am I still able to borrow?
It is more difficult to get an unsecured loan if you don’t have a particularly good credit score. There are loan companies who are willing to lend to borrowers with poor credit, but borrowing amounts are likely to be low and APRs high. Be particularly wary of so-called Payday lenders – these may offer you a personal loan without a credit check, on a short-term basis, but you could be charged unscrupulous interest-rates for the privilege.
For those with poor credit, it may be worth looking into alternatives, such as secured loans. If you are able to offer security to the lender, they may be more willing to accept you for a loan.
SoSmart Money are specialists when it comes to mortgages and insurance. We can put you in touch with a trained expert, who has access to the UK’s leading lenders and using their knowledge and skills will place you with the most suitable lender and product for your needs.
The above post is intended to be informative but does not constitute advice – financial, legal or otherwise. Any opinions given are the author’s own and do not necessarily reflect the views of SO Media.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE