A wise guide to…

Getting a personal loan

Personal loan is a term used to represent both secured and unsecured loans offered by direct lenders in the UK. They’re normally taken out by an individual but can sometimes be a joint application by two parties. They’re not considered the same as mortgages but do include guarantor loans, payday loans and personal loans for bad credit. The borrower applies to receive a set amount of funds from a lender who will then calculate and charge the borrower monthly to pay back the loan. The payments include interest, which is how the business accounts for risk and makes money on the loan commitment.


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Representative 49.7% APR. Representative Example: Borrowing £1,200 at an interest rate of 0.34% per day for up to 75 days (124% per annum, variable) and a Representative rate of 49.7% APR (variable).
Choose Wisely is a trading style of Choose Wisely Limited and is a free to use price comparison website. Choose Wisely Limited is authorised and regulated by the Financial Conduct Authority as a credit broker not a lender, firm reference number 730574 and is registered with the Information Commissioner’s Office number Z3106681.

A quick, easy way to get a personal loan today.

  • Borrow from £300 to £10000.

  • Choose between lenders who have accepted your application.

  • Absolutely no fees, ever.

Representative 49.7% APR.

How to get a personal loan in 3 simple steps.

Affordability assessment.

1 form - takes 2 minutes to complete and your data is 100% secure.

Compare products.

Choose from lenders that have accepted your application.

Speedy finance.

If approved, the cash can be in your account in as little as 15 minutes.[†]

Table of contents

Written by Andrew Freelander
Read time: ~5 mins
Published: 12th March 2020 Updated: 10th September 2020

What are personal loans?

Personal loans are cash sums typically between £100 - £25,000 obtained from banks, supermarkets, credit unions or other online direct lenders. The cash is eventually paid back in monthly instalments over anywhere between 3 months to 5 years. The top 3 most common personal loans types are:

  • Secured loans / homeowner loan
  • Unsecured personal loan
  • Guarantor loans

Why take out a personal loan?

We’re firm believers that at some point in everyone’s lives they'll need to borrow money. It can be for large or small amounts and for any number of reasons. When your income is not sufficient enough to cover unexpected events or a larger expense, you may want to consider getting a personal loan.

Always approach any financial agreement with caution. Only borrow if absolutely necessary and use the right online tools to ensure you're comparing the best rated products. Our personal loan calculator will give you an indication of what you can expect to pay before you use the Get accepted application process to help you to compare the cheapest personal loans from lenders that have accepted your application.

Here are 6 ways personal loan comparison can be helpful:

  • Wedding loans to finance your big day
  • To get a new car or motorcycle
  • When making costly home improvements
  • Debt consolidation loans for one manageable monthly repayment
  • Student loans when leaving home to study
  • To purchase a family holiday

Here are 3 reasons not to consider taking out a loan:

  • Gambling or to support other addictions
  • Small, one off, non-essential purchases like clothing or nights out
  • To pay your monthly bills, rent or mortgage

If you’re taking into consideration a loan to cover your monthly bills, you may be spending more than you have available. Completing a household budget will help but can't guarantee you avoid difficulty, for more help please visit moneyadviceservice.co.uk.

How do personal loans work?

The terms of any personal loan agreement will differ from lender to lender making the amount repayable slightly different. Regardless, any customer looking to secure the best personal loan will experience a similar process for most of the functional parts of a loan agreement.

Here's what to expect:

  • Make an online application with a direct lender or a price comparison website for a set amount over a set period.
  • Provide personal details so an affordability assessment can be carried out.
  • Get soft credit checked so the lender can determine your eligibility and see your credit score.
  • Either compare personal loans (on a comparison site) or finalise your application with your chosen UK direct lender.
  • Upon finalising your application, and signing the credit agreement, you will be hard credit checked (Guidance: This is recorded on your credit profile. Others lenders can see and it can affect future attempts to borrow so be confident.)
  • You will then be notified with the lender’s decision on acceptance.
  • If unsuccessful stop here and consult a Credit Reference Agency (Experian, Clearscore, Credit Karma etc.) to find out why.
  • If successful, once you’ve signed the credit agreement, the funds will be deposited into your bank account.
  • You may then use the funds as you see fit.
  • A continuous payment authority will be set up so the payments can be collected on anything borrowed, plus interest, every month. Usually starting 1 month from the loan being issued.
  • Continue to make repayments until the balance of loan and interest is cleared.
  • Your account is marked as closed and will be visible along with your payment history (future lenders will be interested in this) on your credit report for 6 years.

Where to get a personal loan?

We believe the safest place is here on Choose Wisely. All of the lenders we work with appear on the financial services register. Meaning they are authorised and regulated by the FCA. The biggest difference between us and other price comparison sites or direct lenders is that we can help you compare a range of cheap personal loans no matter what your status and we'll tell you which lenders will accept your application even before you apply. This improves the chance of approval and having your loan paid out.

Any quotation we offer you is free and your personal information is protected. Finalising your application is completely optional, you're under no obligation to continue if you do not wish to. You will only be soft checked as part of any application you make with us. If you do decide to finalise an application directly with a lender, you will undergo a full credit check.

The 8 step process to getting accepted with Choose Wisely:

  • To get started, select the amount you want to borrow using the slider at the top or bottom of this page
  • Click the box for the length of time you wish to repay the loan back over
  • Click the 'Get Accepted' button
  • Fill out the form, it takes around 2 mins and is 100% secure. Be as accurate as you can with income and outgoings
  • Wait for 1 minute while we securely send your data to our carefully selected panel of lenders
  • Our lenders send back their responses and we show you the results ordered by the cheapest product you’ve been accepted for
  • Choose the lender you wish to complete your application with and click 'Get This Loan'
  • Finalise your application with the lender to get a decision. If accepted your funds are deposited into your bank account

How to get personal loans with bad credit?

Getting a loan can seem daunting at the best of times. It is conditional based on your credit report which can make applying even more daunting if it's less than glowing. That doesn't mean it's impossible to get a loan when your credit score is poor. You just have to work smarter not harder.

Most things remain the same no matter what lender you're applying with, regardless of your credit score. Most lenders ask everyone questions about things like:

  • Personal details (Name, age, contact details, area of residency)
  • Current financial responsibilities (rent, mortgage, mobile telephone bills, number of dependants etc.)
  • If you own your house or rent it and when you make those payments
  • Current working hours/ situation (full-time, part-time, self-employed, unemployed, receiving benefits etc.)
  • Documentation of your identity and your bank account details

In addition, some will require extra information about:

  • The loan purpose (Wedding, Car, Holiday etc.)
  • If you have access to online banking or mobile banking
  • If you're an existing customer for any other products (banking, insurance, investing etc.)

Be prepared to have all the information needed and make sure you've planned your application before you commit to help the process run smoothly.

The key to getting a loan when you have bad credit is to make sure you're looking in the right places. Constantly going from lender to lender only to get turned away can be incredibly frustrating and time consuming. This can have a knock on effect on your stress levels and overall well-being. Secondary to this, it can worsen your financial situation as with every application you make a search will appear on your credit profile which lenders are able to see.

Every lender will make a decision on what they think is a reasonable amount of applications over a short period but most view multiple applications as a potential red flag. It may advertise to them that you already have limited accessibility to products and your search for funding is becoming desperate.

At Choose Wisely we specialise in helping those affected by bad credit. In 2019 we helped over 50,000 people find the right loan. You can apply once, we'll feed your info to our lenders safely and securely and they'll respond letting you know if they will accept your application.

This means you don't have to make multiple applications with different lenders. It stops you from being hard credit checked every time, which means lenders won't see your quotation searches that happen as a result of the soft credit checks that happen when you apply with us. You won't decrease your chances of getting paid out.

What is the interest on personal loans?

Interest on personal loans will vary from lender to lender so make sure to check each individual product. It can get confusing, our top 3 tips for avoiding a headache when it comes to interest are:

  • Arrange a call with lenders about choosing. This can be valuable because they'll explain exactly how much interest they charge and you can use the opportunity to ask about any other feature related to their product.
  • Don't confuse interest with APR. In simple terms interest is used to indicate the price of borrowing money. You'll notice all of the products in our comparison table feature APR and not interest. APR is used to show the true cost of your loan as it will combine the price of borrowing with extra fees and charges that get added to the agreement automatically.
  • Interest rates and APRs can either be fixed or variable make sure your clear on which before you take out any loan agreement. If it's variable the rate could change after a few months, making your loan more expensive. Interest rates are normally quoted annually but again, make sure you check to avoid overpaying.
A good example of interest would be:

When borrowing £500, with an interest rate of 10% how much would it cost to repay it 6 months later?

One year at 10% would be 500 divided by 10. Equalling 50. So to borrow £500 over half that time would cost £25.

Personal loan FAQs

What happens to personal loans when the borrower dies?

Any debt a person holds becomes known as a liability of their estate when they become deceased. This means any money the individual has or any assets they own will be used to pay off debts that remain. The debt will be paid off by the executor of the estate until such a point where the money/assets run out. At which point any remaining debt is usually wiped.

Which bank offers personal loans with bad credit?

Most, if not all, high-street banks offer secured and unsecured personal loans. However, not all of them will offer a loan to those with bad credit. If your credit score is low you need to invest some time into figuring out which lenders will accept your application. You can do that quickly and safely on Choose Wisely by using our Get Accepted application process.

If you have a poor credit score you’re unlikely to be offered the best personal loan rates. Meaning the cost of borrowing is likely to be high. Most banks will offer a secured loan to those with low credit so they can account for lending to potentially risky consumers by having assets, like a car, boat or home, pledged as potential collateral should the borrower not keep up their payments.

How many personal loans can you have?

In theory, there is no limit on borrowing or how many personal loan products you can have at any given time. This is not a good reason to apply for multiple products however as every FCA authorised lender is required to carry out robust affordability assessments. If you have more going out than you’ve got coming in or you simply don't have enough leftover at the end of every month to make your loan repayments then you won’t be offered the loan. Most lenders will also require you to have enough left over at the end of the month to cover your loan repayments and leave a buffer of cash to handle any unexpected expenses.

The more loans you’re required to pay back makes it less likely to get further finance as you’re less likely to be able to afford it. If you apply for multiple loans when you can’t afford them this will likely damage your credit score so think carefully before finalising any applications with a lender.

Should I get a personal loan or a credit card?

It’s difficult to suggest what’s best for your individual circumstances without knowing more. That’s why we created the Get Accepted application process. You can input your personal circumstances which we securely show our carefully selected panel of lenders. Based on your information they will send us a response in seconds. Then you can compare personal loans knowing which companies will accept your application before you apply. This currently doesn’t cover credit cards. One advantage a credit card has over a loan is that it offers a revolving line of credit. Meaning should you repay the money you can borrow again, with the same card, up to your credit limit, without needing to reapply. If you think you'll need to borrow, pay that money back and then borrow again, a credit card could be less admin than personal loans.

What if I can’t repay my loan?

If you run into financial problems, and can’t repay your loan, the first thing you should do is tell your lender. In these situations people will opt to shy away from disclosing their situation to a lender out of fear or embarrassment. If you explain your change in circumstances to your lender most will want to find a suitable solution. They may agree to freeze repayments for a couple of months until you get yourself into better financial standing again or they may offer an alternative solution.

You will run into severe financial difficulty if you do not repay your finance agreements, leading to defaults, CCJs and bankruptcy. All of which will harm your financial future if you wish to continue borrowing. If your situation should change so drastically that you simply cannot pay back your loan then you should contact the money advice service for free, impartial advice.

What is APR?

APR stands for annual percentage rate and should not be confused with interest rates. APRs are most commonly used to compare personal loans and other types of credit like credit cards or overdrafts. This is because unlike interest rates, APRs will include other charges you have to pay like arrangement fees for example. These fees will be added automatically and vary from lender to lender so APRs are used to offer a true comparison of the cost over a yearly period.

Adding the extra charges can make dealing with APRs particularly frustrating because it’s possible that with an interest rate of 10%, for example, your APR could actually end up being much higher when the extra charges are factored in. However confusing, APRs are currently the official rate used for borrowing as outlined by the regulator, the FCA. They require all lenders to disclose their APR before a consumer can sign an agreement. They vary from lender to lender.

Written by
Andrew Freelander
Brand & Content Manager at Choose Wisely

Andrew joined Choose Wisely 5 years ago, originally working in a design capacity to make sure the website was simple to use. Most notably he worked with the Consumer Finance Association to design the comparison table of choice for High-Cost Short Term Finance products.

The quickest way to find the best personal loan for you.

No obligation. 100% secure.

Important Information.

All of the information in this guide is correct at the time of writing.

Rates shown are quotes based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to moneyadviceservice.org.uk.

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk