Personal loan

The personal loan is a form of consumer credit. Not assigned to a particular purchase and for an amount of 200 to 75,000 pounds sterling, it is reserved for individuals.

The personal loan in England is a consumer credit that the borrower uses to buy what he wants, without having to justify the allocation of funds to a specific project. It is thus opposed to assigned credit, another form of consumer credit. The personal loan can, therefore, be taken out for any type of use: cash needs, purchase of capital goods (furniture, household appliances, automobile,etc.) or provision of services (works, travel,etc. Its amount must be between 200 and 75,000 pounds sterling.

In England it is possible to take out a personal loan from a bank, a specialized credit organization or via a broker. Since the customer does not have to justify his purchases, the subscription is simplified and often makes it easier and faster to grant credit. However, as with any consumer credit, the procedure must respect a certain formalism, in particular to protect the consumer.

Loan contract

Therefore, the personal loan contract must be a contract established in writing (or on a durable medium) and includes a box containing the essential characteristics of the loan, in particular: duration, rate, amount of the monthly payment, possible insurance, additional costs. The contract must also include a detachable form so that the borrower can exercise his right of withdrawal.

It is almost always a depreciable loan (with constant maturities in the vast majority of cases) with a duration of 3 months to 7 years, but it is not prohibited to offer personal loans repayable in fine. Most often, the personal loan is granted at a fixed rate but the legislation does not prohibit the use of an adjustable rate.

The borrower receives the loan amount at once, by check or bank transfer.

Insurance for a personal loan

Like any consumer credit, the personal loan can be covered by borrower insurance, in order to protect the client and his heirs in the event of death, illness, disability or loss of employment. Lending institutions generally offer their own insurance, but the interested party can completely compete and conclude a contract with an insurer.

In practice, however, it sometimes happens that a lender makes it a condition for granting the loan. If this is the case, this reservation must be indicated in a clear, precise and visible manner in all its advertisements.

Rate for personal loan

Advertisements, any pre-contractual information document, as well as the loan offer must mention the annual percentage rate of charge (APR). The latter represents the total cost of the credit, and as such includes all the costs related to it (nominal rate for interest, administrative costs, etc.). This makes it easy to compare different offers.

The APR offered to the customer will first depend on the amount borrowed and the repayment period. Thus, few monthly payments will lower the rate. Conversely, low monthly payments spread over several years will inflate the cost of credit. Establishments will also tend to offer attractive rates to customers in a comfortable financial situation.