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What's a personal loan?
A personal loan is a lump sum of money you borrow, which you’ll repay over a set period.
You can use it to split a large purchase into smaller repayments, or to consolidate other debts.
Topic breakdown
In this guide, we’ll cover the essentials about what a personal loan is and what you can use it for.
Features of personal loans
Unsecured
Unlike a mortgage where you could potentially lose your house if you can’t keep up with repayments, unsecured loans aren’t tied to an asset.
Quick funding
If you're accepted for a loan, you could have the money in your account that same day.
Higher borrowing limits
You might be able to borrow more with a loan than a credit card. Just make sure you can afford to make the repayments.
Predictable repayments
Fixed loan repayments can offer you reliable repayments if you’re planning a purchase or consolidating debt.
Repayment holidays
Halifax let you request up to two repayment holidays of one month in a 12-month rolling period, depending on approval. Just be aware that your borrowing costs and loan term will increase as a result.
Flexibility
You can use a personal loan for a range of things, from holidays to home improvements.
How do personal loans work?
A personal loan can be a flexible way to borrow money. When you apply, you get to select the amount you borrow and how long you want to pay it back.
You’ll repay the loan in monthly instalments, often with a fixed interest rate. This means you’ll need to pay back what you borrowed, plus a little extra. Some loans may have a variable interest rate, which means it can change over the course of the term.
At Halifax, we only offer loans with fixed interest rates. This means your rate stays the same for the full term. Just be aware, the longer the term, the more you’ll pay in interest overall.
Personal loans are a type of unsecured loan, meaning we don’t need an asset as collateral for your loan. In comparison, secured loans are usually tied to an asset, such as a house or car.
What can I use a personal loan for?
You can use a personal loan to fund all kinds of things, from large purchases and projects, to managing the cost of life events.
Things to consider about personal loans
Is a personal loan right for me?
Different banks and lenders may have their own criteria for who can apply for a personal loan.
Application criteria
Applying for a loan is a significant financial commitment, so you need to consider if it’s right for your circumstances. Acceptance could be influenced by factors like:
- existing debts, or unused credit you already have access to
- how much you can realistically afford to repay
- the reliability of your income
- what you need the loan for
- past loan applications.
Personal loans from Halifax
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