How much can I borrow with a large personal loan?
For many people, a loan between £5,000 and £25,000 is often sufficient to meet their needs, yet with a large personal loan it's possible to borrow up to as much as £50,000, depending on the lender. Of course, the exact amount also depends on how much customers can afford to borrow. This is why it's important for those comparing large personal loans to take their time and do their research, thinking about just how much they need, what they need it for, and how they plan to pay it back.
How much will I have to repay each month?
As with smaller personal loans, larger loans can be paid off over a period of anything from 12 months to seven years. Borrowers are at liberty to choose the length of their repayment period, yet they should remember that shorter periods will result in higher monthly repayments. For those who can't perhaps afford monthly repayments which are that expensive, a short repayment period would therefore be something to be avoided. Even for those who can afford it, it would still require careful budgeting.
By contrast, a longer repayment period makes monthly repayments less expensive, yet at the same time it means that borrowers end up paying more in interest overall. As a result, borrowers should ensure to plan well in advance when taking out a longer term loan, and to consider how they'll manage to make their repayments five, six or seven years down the line.
Do I have to provide any security on the loan amount?
Despite being available for amounts as high as £50,000, large personal loans are unsecured. In contrast to mortgages, for example, which are secured against a homeowner's property, they aren't secured against any of the borrower's assets or possessions. Because of this, none of the borrower's assets or possession are at direct risk of repossession if they fail to keep up with repayments.
However, it's important to be aware, that if they fall behind with repayments, borrowers can be taken to court by lenders and issued with a County Court Judgement (CCJ), which essentially forces a debtor to repay their debts according to an instalment plan. In the most serious of cases, CCJ's can also be issued in tandem with a Charging Order, which transforms an unsecured loan into a secured one, putting the borrower's home at risk if they don't repay what they've borrowed.
Another important thing to mention is that, because a personal loan is unsecured, lenders look at the borrower's credit rating before making a decision on whether and on how much to lend to them. As such, large loans may not be available to those without excellent credit scores and the income to afford the loan.
How much interest will I have to pay?
In choosing a large personal loan, the other important thing to look for besides the amount and the repayment period is the interest rate. Generally, the higher the interest rate, the more the borrower will have to pay over the course of the loan, so it's worth carefully comparing different lenders by using the sliders above, so as to see who offers the best rates. It's also worth remembering that interest rates can vary depending upon the size of the loan, so it's worth checking different amounts as you could be near a loan band to a cheaper rate.
When it comes to interest rates, another important detail when taking out a loan is that borrowers won't necessarily receive the APR the lender advertises. Also known as the annual percentage rate, the APR is the total cost of the loan over a year expressed as a percentage. However, a lender is legally obliged to award this rate to only 51% of those they lend to, meaning that they can get away with giving a higher rate to the remaining 49%. Whether or not a borrower receives a higher rate generally depends on their credit rating, with those on a lower score usually receiving a higher rate than the APR.
What if I have second thoughts?
For those who may get cold feet after taking out a loan, all borrowers have a 14-day cooling off period. This begins either from the date the loan agreement is signed, or from the date the borrower receives a copy of the agreement, whichever is later. Within this period, a borrower can cancel a loan, although naturally they have to return the money in full, including any interest that may have accrued between the start date and the date of cancellation.
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