What is a personal loan?
A personal loan is a way to borrow money and spread the cost of repayments over a set period of time. This can help to spread the cost of a purchase over a number of months or years.
When you take out a loan, you’ll need to pay interest on it. This means you’ll pay back more than you initially borrowed. Interest is calculated as a percentage of the original loan amount and is essentially a fee charged by the lender for letting you borrow their money.
Currently we only offer loans to eligible Vanquis customers. If you're not a Vanquis customer, fear not! We're working on making our loans available to more people. Check this space for updates.
If you’re eligible, we’ll contact you via email, SMS or in the Vanquis mobile app. Here’s what you can expect when we offer you a loan:
- Simple and straightforward online application
- No hidden charges or fees, ever
- No impact to your credit score if declined
You can also call to check your eligibility and receive a link to your online application. Give us a ring on 0333 003 5802*.
To see what other offers may be available to you, download the Vanquis App.
Personal loans are available for any purpose. This means that, unlike a mortgage or car finance, you can use the money you borrow for anything you need. Some of the most common uses of a personal loan are:
- Home Improvements - Including a new kitchen or furniture
- Emergency Expenses - Including car repairs or a new boiler
- Debt Consolidation - Paying off other borrowing to reduce interest payments
Personal loans aren’t available without a credit check, but there is a way to find out if you’re likely to be accepted for a loan without affecting your credit score.
If you use an eligibility checker before applying, this will run a soft credit search to give you an initial decision on whether you can apply. This isn’t a guarantee your application will be accepted, but if you’re turned down at this stage it means you definitely shouldn't apply.
Although this soft search will be recorded on your credit file, it won’t be visible to companies and so won’t have an impact on your credit score. If you carry on with the application, your lender will run a full credit search and this will affect your credit score.
Most lenders typically offer an eligibility checker of sorts on their websites.
Before you apply for a personal loan, you’ll need to make sure you meet your lender’s eligibility criteria. Though this can vary from one lender to another, typically it will include these points:
- You must be at least 18 years old
- A UK resident
- Not legally restricted from obtaining credit e.g. because of bankruptcy
- Affordability criteria, this is based on your incomings and outgoings. Lenders need to ensure that taking out a loan with them doesn’t put you at any risk to your existing financial commitments
- You should be aware of your credit score before applying as a lender will look at this when you make your application
If you are eligible to apply, lenders generally take some additional details, such as how much money you bring in and spend each month, as well as details of any dependents. They use this extra information alongside a full credit check when making a decision on your application.
If you have a bad credit score, you may find that this limits your options when applying for a loan. But you may still be able to borrow money as some lenders offer personal loans for poor credit which are designed for this exact situation.
Personal loans designed for those with an indifferent credit history typically have low borrowing limits and high interest rates, to ensure they’re affordable and reflect the additional risk to the lender. If you make all your repayments on time, this type of loan could help you rebuild your credit history and improve your credit score.
What are the alternatives to personal loans?
If you need to borrow money, an unsecured personal loan isn’t always the only option. You should always consider your own personal circumstances and the purpose of your loan, however here are some alternatives:
- Credit cards - If the strict monthly repayment terms of a loan might cause you problems in the short term, credit cards allow you to repay a higher or lower amount each month, depending upon your circumstances.
- Overdrafts - If you need short-term funding, an overdraft allows you to take a certain amount of money from your bank account if you don’t have sufficient funds in place.
- Secured loans - If you need to borrow a large amount or you think you might be turned down for a personal loan, a secured loan could give you a better chance of acceptance or allow you to borrow more, as you’ll need to put up property or possessions as security against non-payment.
Things to consider before taking out a personal loan
If you’re thinking of applying for a loan, you first need to consider how much you can realistically expect to repay each month and overall. If you can’t keep up with your repayments, you’ll damage your credit score and your lender might take action against you to recover the debt.
You’ll also need to consider how much interest you’ll pay on the loan, and if the fees are unreasonably high, it might be worth considering other options.
Personal Loans FAQs
Can I get a 'Personal Loans' loan 'without a guarantor'?
Yes. Some lenders do offer unsecured personal loans, which means you don’t need a guarantor to act as security against missed repayments. But remember that missing repayments will have a negative impact on your credit score and could affect any future applications for credit.
Will applying for a personal loan affect my credit rating?
Yes, applying for a personal loan will affect your credit rating, regardless of whether your loan application is successful. This is why we recommend running an eligibility check before you proceed with any application for credit.
What happens if I miss a personal loan repayment?
If you miss a personal loan repayment, a record of the missed payment will be noted on your credit file. This will have a negative impact on your credit score. If you miss a number of consecutive repayments, your lender may default your account and start debt recovery proceedings against you. This will further damage your credit score.
What happens if I can’t repay my personal loan?
If you can’t repay your personal loan, you need to speak to your lender as soon as possible to come to an arrangement over repayments. If you ignore the situation, your lender may default your account and start debt recovery proceedings against you. This could lead to you having a County Court Judgement on your credit file, which will affect your ability to get credit and stay on your report for six years which can have a negative impact on your credit file.
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