Personal Loans Explained
How unsecured personal loans work in the UK, what the numbers mean, and how to avoid paying more than you need to.
Calculate RepaymentsCompare APRs, not headline rates
APR rolls the interest rate and compulsory fees into one annual figure, so it is the only fair way to compare two loans. The advertised “representative APR” only has to be given to 51% of accepted applicants.
Shorter terms cost less overall
A longer term lowers the monthly payment but increases the total interest you pay. Use the calculator below to see the trade-off for your amount.
Check for early repayment charges
Most UK lenders let you overpay or settle early, but some charge up to two months’ interest as an early settlement fee.
Use soft-search eligibility checkers
Checking your eligibility on a lender’s site is a soft search and does not affect your credit file. A full application leaves a hard mark.
Worked example
Borrowing £10,000 over 5 years at a 6.1% APR (fixed) works out to roughly £193.03 per month, a total interest charge of £1,581.78, and £11,581.78 repayable overall. This is an illustration, not a quote — the rate you are offered depends on your circumstances and credit history.
Further reading
Your credit file decides what rate you get offered — see our guide on how to build your credit score before you apply.
A note on this page
FinanceLand is an education site. We do not list live loan deals, we are not a credit broker, and we are not authorised or regulated by the FCA. Nothing here is a recommendation or financial advice — always check current terms with the lender and compare on FCA-authorised services. Read more in our terms of use.