Borrowing money

You should always think carefully before borrowing money, as there may be better options for you in the long run than taking out a personal loan. For instance, have you considered dipping into your savings? Or if you’re a student or a graduate, there are loans with special rates of interest for you. And sometimes employers offer low interest loans.

Or it may be better for you to use your overdraft if you have an arrangement with your bank. However, this is not usually an ideal way to borrow money as banks are notorious for charging high overdraft fees, which, in the UK, run into billions each year.

If you are sure that borrowing money through a personal loan is the right way forward for you, then our loans calculator will help you to compare all the options and choose the best loan for you.

If you’re a bit of a beginner with financial products, then borrowing money can seem terrifyingly complicated as loans vary by interest rate, repayment plans and several other factors.

But they do all fall into two main categories, personal loans or secured loans.

A secured loan is taken out against one of your assets, usually your home – and going down this route will usually enable you to borrow a larger sum. But be careful. If you can’t repay a loan that’s secured against your property, it will put your home at risk.

A personal loan isn’t secured against anything, and you can usually take out up to £25,000. But if you default, you’ll end up with a bad credit rating and this will affect any borrowing you do in the future.

If you use our loans calculator, you can compare all the options, and see whether you’d be better off taking out a personal or a secured loan.

Some people borrow money to pay off their debts, such as credit cards, store cards and existing loans. This is called a debt consolidation. While it is often a major improvement to have all your debts in one place, under one interest rate, with a lower monthly repayment, it is always important to remember that debt consolidation loan repayment plans tend to extend for a number of years, and mean that you can end up paying a higher total interest in the long run.