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Pay-monthly loans

Monthly payment loans

  • Search for a pay-monthly loan to suit you, before you apply
  • Check your eligibility without affecting your credit score
  • Compare loans from our panel of trusted providers

What are pay-monthly loans?

Pay-monthly loans are just what they sound like – easy-to-manage loans with a monthly repayment to make. It’s simply another name for a personal loan you repay on a regular basis, usually by direct debit.

What are the benefits of monthly payment loans?

Pay-monthly loans can have several advantages. These include:

  • Flexibility – when you take out the loan, you can choose your repayment period.
  • Affordability – you can select the length of a loan to make your monthly repayments more affordable. A long-term loan will mean lower monthly repayments than the same sum borrowed over a shorter period.
  • Easy repayments – you can set up a direct debit to cover your monthly repayments. Typically, you’ll be able to choose the date that payments are taken so it works for you and your budget.
  • Fixed monthly payments – monthly payment loans usually offer a fixed rate of interest. This means you’ll know exactly how much is leaving your account every month – a big help for budgeting. 

What are the downsides of pay-monthly loans?

If you’re thinking of a pay-monthly loan, take the following into account:

  • It’s a long-term commitment – you need to be sure you can cover the monthly loan repayments if your finances change. For example, you lose your job or your income drops if you’re self-employed.
  • You’ll need a good credit score for the best rates – the interest rate the lender offers you will be based on your credit score. If you have a poor credit history, or no credit history at all, you’re unlikely to be offered the lowest loan rates.
  • Look elsewhere if you don’t want to pay interest – loans always have interest added to the monthly payments. You might find that a 0% credit card suits your needs better.
  • A long-term loan will cost you more – the longer the loan term, the more interest you’ll pay in total.

How much could a pay-monthly loan cost?

Here’s how the length of a loan can affect your monthly payments and the overall cost to you. We’ve used a loan of £3,000 as an example.

APR /loan term Monthly repayments Interest payments Total cost
7% over 2 years £223.38 £361.02 £5,361.02
7% over 4 years £119.23 £723.19 £5,723.19

A longer loan term will make your monthly repayments more affordable, but you’ll pay more in interest so your loan will cost you more overall.

What’s the best pay-monthly loan to get?

The best pay-monthly loan for you depends on your financial circumstances: why you need the loan, how much you want to borrow and how well you can manage the repayments.

As a rule, aim to take out a loan with a low interest rate and pay it back as quickly as you can. This way, you’ll pay less interest.

Read our simple guide to the different types of loans to help you decide which might suit you if you need to borrow.

What do I need to get a loan?

To apply for a pay-monthly loan, you need to meet certain eligibility requirements. These vary among lenders but, in general, you’ll need to be:

  • A UK resident
  • 18 or over (for some lenders it’s 21)
  • A customer of a UK bank or building society with an active current account.

Can I repay my loan early?

Yes, you can pay off a loan early, although the lender may charge an early repayment fee. You can make a partial repayment too.

Ask your lender for an early settlement statement, which you should receive within seven days. It will show:

  • How much you’ve paid
  • How much you owe
  • Any early repayment fees.

You then have 28 days to decide whether or not to repay the loan. You’ll need to weigh up any early repayment charge against the amount you’ll save by no longer paying interest on the loan.

How can I compare loans? 

You can compare loans with Compare the Market. We’ll only show you those that you’re likely to be accepted for, without affecting your credit score. You’ll be able to check if you can use a loan for debt consolidation, if repayment holidays are allowed and if there are any charges for repaying early.

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Compare the Market acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and availability.

Frequently asked questions

Can I get a monthly repayment loan with bad credit?

Yes, it could be possible to get a monthly repayment loan with bad credit. But you’re likely to be charged a higher rate of interest as you’ll be seen as a high-risk borrower.

There may also be limits on how much you can borrow and for how long. You’re also likely to have less choice with fewer lenders willing to offer you a loan.

To see which loans you’re likely to be accepted for before you apply, use our loan eligibility checker. It’s a soft credit check and won’t affect your credit score. 

If you can, try to improve your credit score before you apply for a loan. This could help you to get a lower rate of interest.

Can I get pay-monthly loans on benefits?

As long as you have a regular income – whether that’s benefits, salary or a combination of the two – you could be eligible for a loan. But you may find there are fewer lenders willing to offer you a pay-monthly loan.

If you’ve been on specific benefits for six months or more, you may be eligible for a government budgeting loan.

You can use a budgeting loan to pay for clothing, rent and home maintenance, for example, or costs linked to getting a new job.

Repayments are taken directly from your benefits. The amount you repay is based on your income and what you can afford.

Can I use a pay-monthly loan for debt consolidation?

Pay-monthly loans can potentially be used for debt consolidation, but not all providers offer loans for this purpose.

A debt consolidation loan lets you pay off existing debts with other lenders by bringing them all together into one new loan from a single provider.

You could pay less interest each month if you can find a debt consolidation loan with a lower rate of interest than your existing debt. But you could pay more interest in total if you spread your new loan over a longer period.

If you’re struggling financially, you can get free advice from MoneyHelper.

How can I borrow money urgently?

If you need to borrow money urgently, emergency loans are available.

But emergency loans can be very expensive to pay back, especially those from short-term or payday lenders. And if you’re already depending on other debt to get by, taking out another loan could leave you worse off.

Even in urgent situations, it’s best to avoid making quick borrowing decisions. Take time to explore your options and make sure you can afford to repay what you borrow.

What happens if I apply for a loan and get rejected?

If your loan application is rejected, try not to let any disappointment dash your hopes of borrowing. Instead, focus on working out why your loan was declined and what you can do to improve your chances next time you apply.

You can ask the lender why your application was declined. It might be because you have a low credit score or perhaps your income isn’t high enough to meet their affordability threshold.

Think twice before applying for another loan elsewhere. When you apply for credit, lenders run a hard check that leaves a mark on your credit report. Making lots of applications in a short time suggests you’re struggling financially. If you can, try to wait at least six months before applying again.

Before you apply for a loan, use our eligibility checker. This will show you which loans you’re most likely to be accepted for. It’s a soft search, so lenders won’t see it and it won’t affect your credit score.

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The Editorial Team - Compare the Market

Experts in personal finance, insurance and utilities

Compare the Market’s Editorial Team is made up of industry experts with decades of experience in personal finance, insurance and utilities. Each of our authors has an area of expertise, where they can share their extensive experience to help you get a better deal, by finding the right product and saving money.

Learn more about The Editorial Team

Page last reviewed on 09 APRIL 2025
by The Editorial Team