Personal Loans

Your quick route to a smarter loan

Personal loans can tidy up finances, fund big purchases, or bridge planned expenses without tying your home to the debt. The right loan is less about the headline APR and more about how the total cost, term, and fees align with your goals.

A useful benchmark: US data shows the average personal loan rate at 12.25% for a 3-year, $5,000 loan with a 700 score as of November 2025 (Bankrate). Commercial banks average 12.06% on similar 3-year terms (Bankrate). UK pricing differs by lender and profile, but the principle holds - your credit, income, and loan purpose drive the rate you see.

Understanding APR is not just percentages - it is what you actually pay over time, including any fees.

Approval odds depend heavily on credit health. US evidence indicates borrowers with excellent credit approach a 90% approval rate, while poor credit falls below 1% (Credible). Again, the UK market is distinct, yet the pattern is consistent: better credit and stable income typically mean lower rates and smoother approvals.

Why people borrow matters too. Debt consolidation leads globally, followed by refinancing card balances and home improvements. For smaller sums around £2,000, everyday bills can be a common driver (Credible). Timing can also influence supply and pricing - demand for wedding and home improvement loans tends to spike seasonally (Credible).

Lenders are adapting to changing conditions. Economic resilience, evolving risk profiles, and AI-led underwriting reshape offers and timelines (Experian). Rising delinquencies in some sectors and higher utilisation signals keep credit teams cautious, which can tighten criteria and alter pricing (Experian).

Kandoo is a UK-based retail finance broker. We help you compare options across multiple lenders, so you can see real terms, check eligibility without impact where possible, and apply with confidence.

Is this guide for you?

• You live in the UK and want a fixed-term personal loan

• You carry card balances and are weighing consolidation

• You have near-prime to excellent credit and want clarity on costs

• You have thin credit files and need to understand approval levers

• You want an expert-checked process to avoid expensive mistakes

If you value predictable monthly payments and a defined payoff date, a personal loan can offer discipline and certainty compared with revolving credit.

Key terms made simple

• APR - The yearly cost of borrowing, including fees, shown as a percentage. Use APR to compare offers.

• Fixed vs variable - Most UK personal loans are fixed rate, so your payment does not change. Variable can move with market rates.

• Term - Length of the loan. Shorter terms typically lower total interest but raise monthly payments.

• Soft search - An eligibility check that does not affect your credit score. Useful for rate shopping.

• Debt-to-income (DTI) - Your monthly debt payments divided by income. Lower DTI can help approval and pricing.

• Early repayment - Paying off faster. Check for partial or full early settlement rules and any fees.

• Total amount repayable (TAR) - The full sum you will pay over the term, including interest and fees.

Where to look for your loan

Below is a high-level comparison. Pricing varies by profile and lender policy.

As context, US averages place 3-year bank loans around 12.06% (Bankrate). UK rates differ, but banking channels can be cost-effective for top-tier profiles, while specialists help across broader credit scores.

What it could cost - and why it matters

• Rate drivers: credit score, income stability, DTI, loan size, term, and loan purpose all influence your APR. Higher income tends to correlate with lower rates, independent of credit score (Credible).

• Market context: lenders respond to economic resilience, delinquencies, utilisation, and inquiry trends by adjusting criteria and pricing (Experian).

• Purpose impact: consolidation and refinancing often attract focused underwriting and may unlock better terms if they reduce your DTI (Credible).

• Risk: extending the term lowers monthly cost but increases total interest. Borrow only what you need and consider the total amount repayable.

Small APR differences compound over time - a fraction saved today can mean hundreds saved overall.

Who is likely to qualify?

• Strong credit: Excellent credit correlates with the highest approval odds and the lowest rates. US data indicates near 90% approval at the top end (Credible).

• Fair to good credit: Many lenders still compete for mid-tier profiles, especially with stable income and low DTI.

• Thin or rebuilding credit: Expect tighter limits and higher pricing. A soft search via a broker can clarify realistic options without harming your score.

• Income and employment: Higher and stable income often improves pricing and limits, even independent of score (Credible).

Seasonal patterns can affect underwriting queues - wedding and home improvement peaks may stretch timelines. Applying outside peak windows can sometimes improve speed or availability (Credible).

From search to funds - a clean process

1. Define your purpose and target monthly budget

2. Check credit report and correct any inaccuracies

3. Estimate affordability using realistic income and DTI

4. Run soft searches across multiple lenders via a broker

5. Compare APR, fees, and total amount repayable

6. Choose term that balances payment and total cost

7. Complete application and verify income and ID

8. Accept offer and plan for early repayment options

Upsides, trade-offs, and fine print

Advantages

• Predictable fixed payments and a clear payoff date

• Potential to cut interest versus credit cards when consolidating

• Credit score can improve with on-time repayment and lower utilisation

Considerations

• Longer terms increase interest paid overall

• Early settlement charges or interest recalculations can apply

• Missed payments harm credit and may lead to collections

• Variable market conditions can tighten criteria and raise rates

Read this before you sign

• Compare more than the APR - include fees and the total amount repayable.

• Avoid overborrowing - match the loan to a defined purpose and budget.

• Check early repayment terms - partial overpayments can save interest.

• Watch timing - seasonal demand can affect speed and availability.

• Monitor your utilisation and recent inquiries - lenders do too (Experian).

A 10-minute soft search across multiple lenders can save you years of paying the wrong rate.

Alternatives worth a look

• 0% or low-rate balance transfer cards - useful for disciplined consolidation with a payoff plan.

• Secured lending - may offer lower rates but places an asset at risk.

• Overdrafts - flexible for very short-term needs but often expensive.

• Credit union loans - community-based, supportive underwriting for smaller sums.

• Do nothing - reduce costs, increase income, and delay borrowing if the numbers do not work.

Common questions

• How does a personal loan affect my credit score? Applying can cause a hard search. Once opened, on-time payments and lower revolving utilisation can help your score over time.

• Is a personal loan cheaper than my credit card? It can be - especially for consolidation - but compare APRs, fees, and the total amount repayable. Cards may be cheaper if you have a true 0% plan.

• How much can I borrow? Amounts vary by lender and profile. Strong credit and income support larger limits. Only borrow what you can repay comfortably.

• Fixed or variable rate - which is better? Fixed rates give certainty, ideal for budgeting. Variable rates can fall or rise, which adds risk to monthly payments.

• Will early repayment save me money? Usually yes. Check your agreement for early settlement rules and any fees. Even small overpayments can cut interest.

• What if I have fair or impaired credit? Specialist lenders may help, but expect higher rates. Improving credit and lowering DTI can expand options.

What to do now

• Set your budget and purpose

• Soft search across multiple lenders via Kandoo

• Compare APR, fees, and total amount repayable

• Choose the shortest affordable term

• Plan overpayments to cut interest faster

Important information

This guide is for general information in the UK. Cited statistics from Bankrate, Credible, and Experian largely reflect US markets and are used for context only. It is not financial advice. Check lender terms before committing.