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What is a loan?

A loan is a type of credit, usually a sum of money that is borrowed and expected to be paid back over an agreed period of time with interest. When it comes to keeping your financial plans moving, a little boost can make all the difference. A loan could be useful if you need help to reach a goal – whether you’re looking to buy a new car, renovate your home or deal with some existing debts. We can help find the right loan for you. Our eligibility checker shows you your chance of being accepted, as well as the guaranteed rate, so you can see your options before you decide on a deal.

Supacompare is a credit broker, not a lender – this means we’ll show you products offered by lenders. You must be 18 or over and a UK resident.

What loan do I need?

Unsecured loan

Also sometimes called ‘personal loans’, unsecured loans can typically allow you to borrow up to £25,000 without putting up something valuable as security. However, you’ll still have to be sure that you can afford the repayments.

Secured loan

A secured loan requires you to put up something you own as collateral – in the case of a homeowner loan, your property. You can borrow larger sums of money with this type of loan, but if you can’t pay it back you could lose your home.

Guarantor loans

With a guarantor loan, someone agrees to make the repayments if you’re unable to. This could work for you if you have bad credit or no credit history, but if you don’t pay it back it could damage your relationship with your guarantor.

Bad credit loan

This type of loan is specifically aimed at borrowers who have a poor credit history. While bad credit loans offer a way to rebuild your credit score, they don’t tend to offer the best loan rates. A bad credit loan interest rate will usually be much higher than average.

What could you do with a loan?

You can use a loan for a range of purposes, including:

To spread the cost of buying a car

Found your dream car but don’t have the savings to buy it outright? A loan can help you enjoy your new wheels by spreading the cost of the car into manageable repayments.

To sell more quickly with a bridging loan

A bridging loan can help you to buy a new property before you sell your current home, by ‘bridging’ the gap between sale and completion.

To pay for a holiday

Whether your holiday is abroad or in the UK, a holiday loan can help towards the cost of your next adventure if you don’t have the savings to help out.

To make home improvements

Looking to make renovations to your house? From a new kitchen to a new bathroom, a home improvement loan can help fund the cost of home improvements.

To consolidate existing debts

Finding one low interest rate loan for all your debts can bring the ease of having just one payment to deal with instead of different cards and loans on the go (where it may be easy to lose track and miss payments!).

To pay for a wedding

While a wedding may be the best day of your life, it can also be an expensive one! A wedding loan can help manage the cost of your big day and minimise money worries.

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What will my loan cost?

It’s important for you to work out what your loan will cost you in terms of monthly repayments over the term.

Whether you’re looking to take a £5,000 loan or even £15,000, our loans calculator can help you work out how much you can afford to borrow by entering how much you can afford to pay back each month and the length of time you can afford to pay that amount (and at what interest rate.)

It’s worth noting that smaller loans tend to have higher interest rates, which can affect the affordability of your loan - so if you take out a loan over a longer term you should be able to bring the repayments down.

Representative example
Loans Amount	Monthly repayments	Length of agreement
£10,000	£179.07	60 months
Total amount repayable	Representative	Annual Rate of Interest (nominal)
£10,744.50	2.9% APR	2.86%

More questions? we've got you covered...

Individuals and businesses use mortgages to buy real estate without paying the entire purchase price up front. The borrower repays the loan plus interest over a specified number of years until they own the property free and clear. Most traditional mortgages are fully-amortizing. This means that the regular payment amount will stay the same, but different proportions of principal vs. interest will be paid over the life of the loan with each payment. Typical mortgage terms are for 30 or 15 years. Mortgages are also known as liens against property or claims on property. If the borrower stops paying the mortgage, the lender can foreclose on the property. For example, a residential homebuyer pledges their house to their lender, which then has a claim on the property. This ensures the lender’s interest in the property should the buyer default on their financial obligation. In the case of a foreclosure, the lender may evict the residents, sell the property, and use the money from the sale to pay off the mortgage debt.

Would-be borrowers begin the process by applying to one or more mortgage lenders. The lender will ask for evidence that the borrower is capable of repaying the loan. This may include bank and investment statements, recent tax returns, and proof of current employment. The lender will generally run a credit check as well. If the application is approved, the lender will offer the borrower a loan of up to a certain amount and at a particular interest rate. Homebuyers can apply for a mortgage after they have chosen a property to buy or while they are still shopping for one, a process known as pre-approval. Being pre-approved for a mortgage can give buyers an edge in a tight housing market because sellers will know that they have the money to back up their offer.

The price of a home is often far greater than the amount of money that most households save. As a result, mortgages allow individuals and families to purchase a home by putting down only a relatively small down payment, such as 20% of the purchase price, and obtaining a loan for the balance. The loan is then secured by the value of the property in case the borrower defaults.

Mortgage lenders will need to approve prospective borrowers through an application and underwriting process. Home loans are only provided to those who have sufficient assets and income relative to their debts to practically carry the value of a home over time. A person’s credit score is also evaluated when making the decision to extend a mortgage. The interest rate on the mortgage also varies, with riskier borrowers receiving higher interest rates.

Many mortgages carry a fixed interest rate. This means that the rate will not change for the entire term of the mortgage—typically 15 or 30 years—even if interest rates rise or fall in the future. A variable or adjustable-rate mortgage (ARM) has an interest rate that fluctuates over the loan’s life based on what interest rates are doing.