Finance

What is a personal loan? Check everything you need to know!

If you are in dire need of cash but don’t want to go for a traditional loan, personal loans can save the day. A personal loan, for the uninitiated, is a short-term and unsecured advance, which is usually secured against the income of the borrower. In the UK, people take over £170 billion in personal loans each year. Below are some quick facts.

Getting a personal loan

Depending on the lender, you can borrow as much as £25,000 for a period of three to five years. The money is usually paid in instalments, which is a big advantage. It must be noted that both personal and payday loans are similar forms of unsecured loans, but the latter is payable on the next payday. Personal loans, on the other hand, are more flexible in terms of repayment.  There are websites like www.luckyloans.co.uk/, where you apply for a personal loan and can get approved in a day. The funds are also deposited in your account on the same day.

The requirements

To get a personal loan, you need to be an employed or salaried professional, with a legal job and stable income. You must be a resident of UK, should be aged 18 or above, and must have an active bank account. The loan instalments are usually deducted from the account itself, so the bank account must be funded before the due dates. Credit check is usually not required for personal loans, but some lenders might be interested in the same, especially if the amount is too high.

Things to note

Since such loans don’t require a collateral, it is understandable why the interest rate is so high. While personal loans can be used for any purpose, you need to understand that the instalments will affect your monthly earnings. Do not use these loans recklessly, and it is also very important to repay the loans on time. Keep in mind the delays and fines can be expensive. The good thing is lenders are rather flexible with the repayment terms, so you can work things in advance.

Personal loans can be used for paying car repair bills, vacations, personal expenses, home improvement work and any other reason for that matter. Just use the option wisely and only when need the most. You can check online and apply for one in less than five minutes, and if approved, money can be transferred in just 15 minutes.

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