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What is a Personal Loan?
What are the main types of personal loan?
There are two main types of personal loans:
- Fixed rate loans - where the interest rate stays the same for the length of the repayment term. This can be a good option for those looking to budget.
- Variable rate loans - where your interest rate can change from month to month. This means that your repayments can go up or down in line with the base rate.
At Lloyds Bank, we only offer fixed rate loans. You can pick how long your term is, from 1 year up to 7.
Just bear in mind, the longer the loan term, the more interest you could end up paying overall.
What can you use a personal loan for?
You can use a personal loans for almost anything. You might want to use a loan for:
- Home improvements - including renovations and repairs.
- Moving house - to cover any moving expenses.
- Weddings - from venue hire to catering costs.
- Consolidating debts - such as moving existing credit card debts into one place.
- Holidays - so you don’t have to pay all at once.
- Buying a car - instead of using Personal Contract Purchase (PCP) or Hire Purchase (HP).
What can't you use a personal loan for?
There are some exceptions, which you can’t use a personal loan for. These include:
- Gambling.
- Investing or purchasing shares.
- Business expenses.
- Any form of illegal activity.
- House deposits.
- Leasing land or property.
- Timeshares or holiday clubs.
Things to consider before applying for a personal loan
Before you apply, it may help to weigh up the pros and cons of a loan. Look at what you can expect from a personal loan below:
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Cons of personal loans: |
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Pros of personal loans:
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Let’s look at the details
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When you apply for a personal loan with a fixed rate, there are usually no fees if you make your regular repayments on time. You could face fees if you make a late repayment or want to pay off the remaining loan balance early.
If you do want to pay the entire loan early, we'll charge up to 58 days' interest.
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Yes, you may be able to pay off a personal loan before the end of your agreed term. But you may have to pay an early repayment charge. This varies from lender to lender.
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It depends on the lender. Some lenders may let you get a personal loan with a low credit score, but you may face a higher interest rate due to the borrowing risk.
If you’re concerned about your credit score and whether you’ll be approved, you can speak to one of our advisors about your options.
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