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[1] Correct as of June 2026.
A personal loan lets you borrow a lump sum from a lender. You then pay it back, plus interest, in fixed monthly instalments over an agreed period of time (or term).
Most banks and building societies offer personal loans up to £25,000 (you can compare personal loans up to £50,000 with Compare the Market).
A personal loan could be a good option if there’s a major expense coming up that you’d struggle to pay for in one go.
Before you apply for a personal loan, you can search for loans you’re likely to be accepted for with our free eligibility checker. It’s a soft credit search so won’t impact your credit score in any way.
Try our eligibility checkerOur loan calculator gives you an idea of how much you could borrow when comparing loans. It can also tell you how much your monthly repayments could be.
The cost of a personal loan depends on how much you want to borrow, the APR and how long you take to pay back the loan.
Personal loan rates vary according to the size and length of the loan, as well as your personal circumstances. A longer loan term may attract better interest rates, but the overall cost will be higher than a short-term loan.
The following example is for illustrative purposes only. It shows the total cost of borrowing £10,000, at a different APR over two and five years, assuming there are no extra fees.
APR/loan term | Monthly repayments | Interest payments | Total cost of loan |
|---|---|---|---|
10% over 2 years | £459.46 | £1,027.10 | £11,027.10 |
7% over 5 years | £197 | £1,819.94 | £11,819.94 |
Use our loan calculator to get an idea of how much a personal loan could cost you.
If you think a personal loan could be right for you, here are some pros and cons to weigh up first.
Flexible terms: you can choose how much you want to borrow and how long to repay. However, this does depend on your credit score and will affect the amount of interest you’ll pay overall.
Fixed repayments: personal loan interest rates are usually fixed. This means you’ll repay a set amount each month, making it easier to budget.
Quick and easy to apply: you can often apply for personal loans online. If you’re approved, the lender will usually deposit the money into your account within a few days (or even a few hours if you’re already a customer).
Higher interest rates: personal loans tend to have higher interest rates than loans secured against an asset.
Long-term commitment: if you take out a loan but later lose your job and struggle to find work, you could find it hard to meet your repayments.
The interest rate advertised may not be the rate you’re offered: this is because the representative APR is given to at least 51% of successful loan applicants – nearly half of applicants may get a different rate. The rate you’re offered is based on your circumstances. This means it could be the same as the representative APR, lower or higher.
Penalties if you default: a default is when the lender decides to close your account because you’ve missed payments. A default is visible on your credit file and could make it harder for you to get credit in the future.
These five steps could help you find the right personal loan for your needs:
Decide what you can comfortably repay each month and don’t overstretch your finances. Our loan calculator can show you what your monthly payments could be.
There’s no point paying interest on debt you don’t need. Resist the temptation to borrow more, even if you’re eligible to do so.
A healthy credit score shows lenders that you’re a reliable borrower. Loan providers are more likely to offer you the lowest rates if they can see you handle your finances responsibly.
If you want the option of repaying the loan early, for example, check there’s no penalty charge to pay.
Compare personal loans with us and we’ll only show you loans you’re likely to be accepted for and the rates you’re likely to be offered. We use a soft search, so there’ll be no impact on your credit score.
If you miss a repayment, the lender may add extra charges and interest to your loan.
Missed or late payments will also be noted on your credit report, which could harm your credit score and make it harder for you to borrow in future. The provider can also take legal action or pass your debt to a collection agency.
If you think you won’t be able to make a loan payment, contact your lender. Don’t ignore the issue.
It might be possible to get a loan with bad credit, but there may be restrictions on how much you can borrow and for how long. You can also expect a high rate of interest.
Yes, you can be pre-approved for a personal loan. Pre-approval means your loan application will be accepted based on the information you provide.
However, it doesn’t mean that your application is guaranteed to be accepted. The lender will run final checks before giving the green light.
If you’re struggling to repay your loan, contact your lender as soon as possible. They may be able to support you with managing your repayments.
You can also get free debt advice from trusted services such as MoneyHelper, Citizens Advice and National Debtline. They should be able to help you organise a debt repayment plan with your lender.
Yes, you can pay off your personal loan early, but you might have to pay an early repayment charge (ERC). This varies between lenders, but your loan agreement will detail the size of any penalties.
If your personal loan has a fixed interest rate, it won’t be affected by a change in UK interest rates. Your monthly repayments remain the same, regardless of what happens to the Bank of England base rate.
No, car finance works differently to a personal loan, depending on the type of finance you choose. Read more in our guide Should I get a bank loan or car finance to buy a car?
[1] Correct as of June 2026.
[2] As of 1 July 2026, Compare the Market had an average rating of 4.9 out of 5 from 135,810 people who left a review on Trustpilot. The score 4.9 corresponds to the Star Label ‘Excellent’.
