Personal loans are governed by the Consumer Credit Act 1974. The Act contains strict regulations about how money is lent and covers unsecured loans up to £25,000 (these are known as 'regulated loans').
When taking out a personal loan you will be asked to sign a credit agreement, and you'll be bound by it's terms. Although lowest APR (Annual Percentage Rate) is one factor that contributes to a ‘cheap’ loan, you should always pay attention to the small print.
Loan values can vary from each provider however, the range usually starts at £1,000 up to £25,000. Some lenders do apply an early settlement charge (also known as a redemption penalty) if the debt is repaid in full before the agreed end date. This can be up to 2 months interes. There is an amount of flexibility available within these loans such as being able to pay off the loan in a far quicker period of time than originally planned or you may be able to take payment holidays.
Payment Protection Insurance is a policy in addition that you can take out which covers the repayment of your loan in the event of sickness, unemployment or an accident. You can buy these policies through your original lender or as a 'stand alone' policy from an additional lender.
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