Applying for a personal loan might affect your credit rating as the company lending you money wants to check if it can trust you to pay it back. Be careful about this if, for example, you’re also planning to apply for a mortgage soon. Doing a soft search using an eligibility calculator should not have an impact on your credit rating.
You can check your credit score for free using:
Some of these offer a soft search for loans, but you can search for others online.
Check the monthly repayment amount and the total amount you’ll end up paying the lender. This can help you find the most affordable option and the one that will cost you the least overall.
Always check whether the interest on your loan is fixed or variable. If it’s fixed, the interest rate will stay the same until the loan is paid off.
A variable interest rate can go up or down. Be very careful with loans like this – if you can only just make the initial repayments you could get into money trouble if interest rates go up, so think carefully before taking them out.
If you own your own home, you might be tempted to consider a secured loan.
However, this is a much riskier option as the money you borrow is secured against your home.
This means if you can’t repay the loan, the lender could force you to sell your home to pay off what you owe.