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What to consider when taking out a personal loan
A personal loan can be a convenient way to borrow a fixed amount and repay it by spreading the payments over a set period (the Term).
With a personal loan, interest is charged on the amount you borrow. You need to pick the amount and term that is affordable to you.
As part of our commitment to helping you make an informed decision, here are things to consider when taking out a personal loan.
- What kind of features and benefits can I expect?
- What commitment do I need to make?
- Are there any risks?
- What else should I think about before I commit?
What kind of features and benefits can I expect?
The main benefit of a personal loan is access to the money you need to pay for the things you want. With a Halifax Personal Loan you can borrow between £1,000 and £25,000 and spread the repayments over 1-7 years. You need to pick the amount and term that is affordable for you.
Personal loan interest rates can either be variable or fixed. The interest rate on Halifax Personal Loans is fixed, so you can budget with confidence knowing your payments won’t go up.
What commitment do I need to make?
The biggest commitment is making your repayments for the term of the loan on time. So think carefully about what you can reasonably afford to repay. But remember, you also pay interest on what you borrow, so you’ll pay back more than the initial amount of your loan. To make life easier, you can choose to pay by Direct Debit at no extra cost.
The term you take the loan out for will affect the size of your repayments, so if you want smaller repayments, you should repay your loan over a longer term. Just keep in mind, the longer you take to repay your loan, the more interest you’ll be charged overall.
You should also consider how you’ll manage to make your repayments if your circumstances change – for example, if you lose your job. We can talk about ways to protect you against the unexpected as we offer Payment Protection Insurance.
When you apply for a loan, we’ll usually look into your credit history by consulting a credit reference agency. If you apply for lots of credit, this could have a negative impact on your credit rating.
As long as you keep up with your repayments, there are no risks.
If you breach your loan agreement, we may charge you for our costs in recovering late or missed repayments; share information with credit reference agencies (which could affect your ability to get credit in the future); require you to repay the loan in full immediately and take court action to recover the debt and take any money you owe us from any other accounts you have with us which have a credit balance, including joint accounts, where there are sufficient funds.
You can settle your loan agreement at any time by giving us notice in writing and paying off the amount you owe. If you wish to settle early you should contact us for a final settlement figure which may include an early repayment fee.
What else should I think about before I commit?
If you have savings, you may consider using this money. The interest you pay on a loan may be higher than the interest you earn on your savings. Don’t forget, there are different types of borrowing for the short to medium term that may suit you better, such as an authorised overdraft or a credit card. If you are a home owner, you may prefer a secured loan which uses your home as security. A secured loan usually offers a lower rate of interest, however if you cannot repay it, we can sell your home to recover the money we lent you.
Next Steps
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Find out more about Halifax Personal Loans. |
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If you'd like to discuss our personal loans and your finances in more detail, why not have a face-to-face review in branch? Find out more about our Customer Review service. |
