A loan is simply a borrowed sum of money that the lender, such as a bank,
lends you with the expectation that it will be paid back with interest
(i.e. the cost of borrowing the money) on top. This means when you take
out a loan, you will pay back more than you borrow.
There are many different types of personal loans to compare, so it's important
to know how they all work before you borrow money. With a better understanding
of loans, you can save money and make informed decisions about debt – including
when to avoid it. Not all loans are suitable for everyone, so it's vital to do
your research and compare loans to find the one that best suits your needs.
How much can you borrow?
Loan companies will assess how likely you are to be able to repay your loan.
The amount you can borrow and the interest rate you receive will be based on
this assessment, which factors in your income, your financial assets (savings,
investments, possessions of value, etc.) and your credit history.
With a secured loan you can usually borrow a lot more, up to £250,000 or more.