Personal Loans - Things to consider

A personal loan can be a convenient way to borrow a fixed amount and repay it by spreading the payments over a set period (the Term).

With a personal loan, interest is charged on the amount you borrow so you'll need to pick an amount and term that you can afford.

As part of our commitment to helping you make an informed decision, here are some things to consider when taking out a personal loan.

1.

What do I want from a personal loan?

The main benefit of a personal loan is access to the money you need to pay for the things you want. With a Bank of Scotland Personal Loan you can borrow between £1,000 and £50,000 and spread the repayments over 1-7 years. You just need to make sure you can meet the repayments over the term you choose.

Personal loan interest rates can either be variable or fixed. The interest rate on a Bank of Scotland Personal Loan is fixed, so you can budget with confidence knowing your payments won’t go up.
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2.

Making sure I can meet the repayments

The biggest commitment you will have is making your repayments for the period of your loan. So think carefully about how much you can afford to repay without making life hard for yourself. Remember, you have to pay interest on what you borrow, so you’ll pay back more than the initial amount you borrowed.

To make life easier, your repayments will come out of your account automatically every month by Direct Debit. You just have to make sure you've got sufficient funds in your account.

The term you take the loan over will affect the size of your repayments, so if you want smaller repayments, you should repay your loan over a longer term. Just remember, the longer you take to repay your loan, the more interest you’ll be charged overall.

You should also consider how you’ll manage to make your repayments if your circumstances change.

When you apply for a loan, we’ll usually ask a Credit Reference Agency for your credit history. If you apply for lots of credit, this could have a negative impact on your credit rating.
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3.

Are there any risks?

As long as you keep up with your repayments, there's no need to worry.

But if you breach your loan agreement, we may charge you our costs in recovering late or missed repayments. To recover debt we may also take any money you owe us from any other account you hold with us. You should also be aware that this could affect your rating with credit reference agencies.
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4.

What are my other options?

If you have savings, you might be better off using this money instead of taking a loan. That's because the interest you pay on a loan might be higher than the interest you earn on your savings.

Don’t forget, there are other types of borrowing that may suit you better, such as an authorised overdraft or a credit card. If you are a home owner, you may prefer a secured loan which uses your home as security. This usually gives you a lower rate of interest, but please be aware if you cannot repay it, you could lose your home.
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