Personal loans continue to be among the top choices of consumers in both the United Kingdom and the United States of America. They allow people to have a quick loan for various purposes like: consolidating debt, doing some home improvements, paying the doctor, getting married, and also covering unexpected expenses. The low and competitive interest rates, the repayment schedule that can be adjusted according to the borrower’s convenience, and being able to borrow without having to provide a loan guarantee make personal loans a very eye-catching option for several borrowers.
This piece will delve into the mechanics of personal loans, the best lenders in the UK and USA, average rates, and tips for getting approved.
What is a Personal Loan?
A personal loan is a type of unsecured loan that gives you the privilege of borrowing a definite amount of money and paying it back in monthly installments, normally, over 1 to 7 years. Personal loans, as opposed to home loans or vehicle loans, do not ask for any kind of security. Mainly the acceptance and rate of interest will depend on your credit score, income, and debt-to-income ratio.
- Secured vs. Unsecured: Secured loans are always backed by collateral (such as a car or house), whereas unsecured personal loans are not.
- Fixed Interest Rates: The greatest number of personal loans are offered with fixed interest rates, hence your monthly payment remains unchanged.
- Loan Amounts: In the UK, it is usually from £1,000 to £50,000, and in the USA, it is $1,000 to $100,000.
Average Personal Loan Interest Rates
UK
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Excellent Credit (Score 720+): 6% – 8% APR
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Good Credit: 9% – 15% APR
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Fair/Poor Credit: 20%+ APR
USA
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Excellent Credit (FICO 720+): 7% – 10% APR
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Good Credit: 11% – 17% APR
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Fair/Poor Credit: 20% – 35% APR
The use of a personal loan to consolidate credit card debt is a money-saving idea which is very effective if the interest rate of your credit card is over 20% and you manage to get a loan with an APR of under 12%.
Best Personal Loan Providers in the UK
- HSBC Personal Loan – Starting at 6.7% APR, with flexible terms up to 8 years.
- NatWest – Online approvals in a matter of minutes, loan amounts up to £50,000.
- Tesco Bank – Attractive fixed rates for loyal customers.
- Barclays – Money credited on the same day for approved applicants.
USA Best Personal Loan Providers
- SoFi – No charges, adaptable repayment options, amounts up to $100,000.
- LightStream – Attractive APR for great credit history, on the very day the money becomes available.
- Marcus by Goldman Sachs – No secrets where fees are concerned, adjustable payments.
- Discover Personal Loans – Instant approvals, loans tailored for managing your debts.