Best Personal loan

A personal loan is when you borrow a certain amount of money from a lender and pay it back over an agreed period of time, usually with interest added.

Personal loans are commonly used to fund large purchases, like buying a new car, home improvements or paying for a wedding.

You choose how much you want to borrow and agree to repay it over a set period of time with a fixed or variable rate of interest added.

A loan that uses an asset you own as security, like property, is called a secured loan. An example of a secured loan is a mortgage. If the loan is not backed by something of value, it's called an unsecured loan. Personal loans are always unsecured.

Before you apply for a personal loan, it's worth checking your credit score, as it can affect how much you can borrow and the interest rate you'll be offered. When you're looking for a loan, compare lenders to find one that offers an interest rate and repayment period that suits you. Once you apply, you'll need to pass some affordability checks before your application can be accepted.

There's no universal minimum credit score required for a personal loan, as different lenders use different criteria. Generally, the better your credit score, the more likely you are to be accepted and offered a lower interest rate. If your credit score is lower, you may still be able to borrow but could be offered a higher rate or a lower loan amount. Checking your credit score before applying and using eligibility checkers that don't affect your credit file, can help you identify which lenders are most likely to accept you.

A secured loan is backed by an asset you own, most commonly your home. This means the lender can repossess the asset if you don't repay. Secured loans typically offer higher borrowing limits and lower interest rates as a result. An unsecured loan, like a personal loan, is not backed by an asset, so the lender has no claim on your property if you can't repay, but interest rates may be higher and borrowing limits lower.

Personal loan amounts typically range from £1,000 to £25,000, though some lenders offer more. The amount you can borrow will depend on your income, credit history and the lender's own criteria. Larger amounts and longer repayment terms mean more interest paid overall, so it's worth borrowing only what you need and choosing the shortest repayment period you can comfortably afford.