Personal loans Loans FAQs
I have a poor credit history – can I get a loan?
It's possible, but it is also likely you'll end up paying a higher rate of interest for your loan than someone with a stronger credit history. Lots of loan providers use risk-based pricing to determine the interest rate they will offer you, and the poorer your , the higher the cost of your loan.
There are also lenders who specialise in loans for people with poor credit histories, but these rates tend to be very high. A good alternative is a credit union. Credit unions often lend small amounts over short periods of time, and don't charge early repayment penalties.
A personal loan can be a good way of consolidating credit card debt
I have lots of credit cards debts – is it possible to consolidate them into one loan?
Personal loans usually have lower interest rates than credit or store cards, so they can be a good way of paying off this debt.
This can be a risky strategy, however, if you carry on spending on your credit card – so if you do take out a consolidation loan, make sure you stop using the cards.
My lender has given me a loan quote which includes Payment Protection Insurance (PPI) – should I take out the PPI policy?
PPI can be ridiculously expensive. It can often cost as much, or more, as other types of insurance that provide much better protection.
Lenders are no longer allowed to add the cost of a PPI policy to your loan and charge you interest on it (which used to be known as selling 'single premium' PPI). However, buying PPI direct from your lender without shopping around is still likely to mean you get bad value for money.
PPI policies also have many exclusions, so it’s by no means certain that you’ll get any money from your provider if you do have to make a claim. Also, most PPI policies only last for five years, so if your loan or finance agreement term lasts for longer than this, you won't be covered.
For more information on PPI and the issues associated with it, check out the Which? PPI campaigns page.
- For any financial query, call our experts on the Which? Money Helpline
- Do you know your rights when paying with credit card? Find out in our guide
- Read our guide on finding the best ways to borrow
