There are a number of things to think about before you take out a personal loan; such as, how much can you afford to borrow and how long you should borrow for. With a personal loan you borrow a set amount of money, usually between \u20ac2,500 and \u20ac25,000, over a set number of years, typically between three and five years although you can get longer term loans.<\/p>\n
You can use a personal loan for both short and long-term borrowing, such as paying for a holiday, education fees, a car, home improvements or a wedding. The minimum loan is usually about \u20ac2,500, although credit unions may offer their members smaller loans.<\/p>\n
Banks, building societies, finance companies and credit unions offer personal loans. You apply for a loan of a certain amount over a certain term.\u00a0If your lender approves your loan, they will work out your monthly repayment, and you must pay at least that amount to clear your loan in the agreed time. Some banks offer more attractive rates for specific loans, such as home improvements or a car loan compared to a general personal loan.<\/p>\n
Under the Central Bank’s Consumer Protection Code<\/a>, a lender cannot offer you a pre-approved loan.<\/p>\n When you take out a loan, you may be offered payment protection insurance<\/a>\u00a0(PPI), but the cost of this insurance must be quoted separately to your loan repayment. PPI is not compulsory. With most loans, your monthly repayment covers the\u00a0interest for that month and also pays something off the amount you\u00a0borrowed. So the balance remaining on your loan reduces each month.<\/p>\n Banks, building societies and finance houses usually require you to pay back your loan by direct debit<\/a> or by standing order<\/a>, so you will need to have a current account<\/a> in order to set that up. Credit unions are more flexible and may allow you to pay by cash, cheque,\u00a0standing order and in some cases, direct debit.<\/p>\n