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Finding the right personal loan for you

By Matt Fernell, Editor-in-Chief at

Matt Fernell

Unsecured personal loans allow you to borrow up to £50,000. Here’s everything you need to know about getting the right personal loan for you.

How to find the right personal loan

Before you start your search, here are a few important things you need to know first:

  • How much you need to borrow: You can borrow up to £50,000 with a personal loan - if you need to borrow more, you might need a secured loan.

  • How long you need to repay the loan: The longer your loan term, the lower your monthly payments will be, but you’ll pay more in interest overall.

  • Your credit score: Lenders will check your credit score when you apply, and your application could be rejected if you have a low score.

  • Is it the right option: Unsecured personal loans can be expensive, so make sure you have considered the alternatives first.

When you compare personal loans with, we’ll check your eligibility first without impacting your credit record. 

This means we’ll only show you quotes you’re eligible for, reducing the risk of a rejected application, which will damage your credit score.

You can find out more about the ins and outs of how personal loans work here.

Make sure a personal loan is right for you

Personal loans are a long-term commitment that you repay over multiple years. To make sure an unsecured loan is right for you, here are some questions you should ask yourself: 

Can you afford to pay it back?

You'll need to be honest about your financial circumstances and if you have the income and budget to keep up with your repayments. 

Missing a loan repayment can harm your credit rating, which could make it harder to get a mortgage, loan or credit card in the future.

Are you happy to repay the loan over a long period?

Many people use personal loans to pay for a large, one-off purchase, like a new car, a holiday, or home furniture. 

Loans can take a long time to repay, which means you'll still be paying off your loan long after you’ve made the purchase and even after you’ve stopped using the item. Ask yourself if whatever you’re using the loan for will still be worth it to you in one to five years.

For example, if you get a loan for £5,000 to buy a new car at 15% APR for five years, you’ll repay close to £7,000 because of interest. In that same period, the car you bought for £5,000 may now only be worth around £2,500. 

Plus, there’s a chance you may have changed your car before the end of the loan term, so think about whether you still want to be paying for it in five years.

Is it the cheapest form of borrowing available to you? 

Personal loans can be expensive, and there may be cheaper options depending on your circumstances and what you need the money for. 

For example, you could get a 0% credit card lasting 18 months, borrow the amount you need, and repay the balance before your 0% interest period ends. This could save you hundreds of pounds because you won’t need to pay interest.

Do you have a reliable income? 

Unsecured personal loans are a long-term commitment, so you need to be sure you'll be financially secure during the repayment period. 

A personal loan may suit you if you're in a stable job and likely to remain in the position. A loan could be riskier if you're self-employed or a freelancer, where your income isn’t always consistent every month. 

If you’re in a line of work where your job might be at risk, you’ll need to seriously consider what might happen if you lose your job and cannot keep up your repayments. 

Pros and cons of personal loans


  • Quick application process

  • You can be approved and get your loan on the same day

  • You choose the length of your repayment period

  • It can be spent on anything

  • You can apply for personal loans online

  • Managing the loan well can boost your credit rating


  • They're a long-term commitment

  • Higher interest rates compared to other forms of credit

  • Difficult to borrow with poor credit

  • Expensive fees for missed repayments

Alternatives to personal loans

If you’re not sure a personal loan is the right option for you, or you want to explore all your options, here are some alternatives to consider. 

0% credit cards 

0% credit cards are interest-free for a period of time, usually between 12 to 18 months. With these cards, you can borrow what you need and repay what you've borrowed in monthly instalments during your 0% period. Doing this means you won't have to pay interest.

You may need a good credit rating to be approved for these cards, but they're an option worth exploring because they can help you save money. Here's everything you need to know about how 0% purchase credit cards work.

Secured loans

Secured loans are when you use a high-value asset- usually your home- to secure a loan. You can typically borrow more with a secured loan, and the interest rates can be lower; however, you risk losing your home if you can’t afford to keep up repayments. Find out more about how secured loans work here.

An overdraft

It's possible to apply for an overdraft on your current account, allowing you to borrow directly from your bank. Overdrafts may charge you for each day you're overdrawn and can be expensive, so you must repay what you borrow quickly.

The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.

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Frequently asked questions

Can you get a personal loan when you are self-employed?

You can, but it may be more challenging because you'll have to prove your income to show you can afford the loan repayments. As long as you have a good credit history, you should be able to find a lender willing to offer you a loan.

Can I repay my personal loan early?

Some personal loans will allow you to repay your loan early, but many won't. If you can repay your loan off earlier than originally agreed, a fee will sometimes be charged. This is either called an early exit fee or an early repayment fee.

Do personal loans show up on your credit report?

Yes, they appear on your credit report, but other lenders do not view them negatively and shouldn't damage your credit rating if managed well.

Do I have to pay income tax on a personal loan?

No, you won't have to pay income tax on a personal loan. Your money isn't considered income because you have to pay the money back, unlike your wages or other earnings. If you're filling out an income tax return, you don't need to report any personal loans you've taken out.

Why are unsecured loans expensive?

Personal loans charge a higher interest rate than other types of loans to protect the lender. If you cannot repay the loan, it can be very difficult for the lender to get their money back. Lenders charge a high interest rate to make it less risky for them.

Will a personal loan affect my credit score?

Every time you apply for a personal loan, it'll be recorded on your credit report. Having a personal loan on your credit report shouldn't affect your future eligibility as long as you’re responsible. 

Personal loans can improve your credit rating if you manage your loan well and make repayments on time, but it also goes the other way. If you miss repayments or default on your loan, your credit rating may suffer, making it more difficult to get credit products in the future.

How long does it take to get approved for a personal loan?

The application process for a personal loan can take minutes, and you may be approved within the same day. 

It shouldn't take more than a week for the money borrowed to appear in your current account - some lenders can even deposit it within hours of your application.

What is a good interest rate on a personal loan?

The best personal loan rates are currently just below 6% APR, but they can also be as high as 100% APR. 

The best personal loans will be the ones with the lowest APR, although these may not be accessible to everyone. To help you get the best deals, work on improving your credit score.