Everything you need to know about our personal loans

Written by

Gillian Brooks

Gillian Brooks is Head of Lending at Novuna Personal Finance. She has over 30 years' experience primarily within Financial Services, spanning product development and marketing for personal loans, mortgages and savings. Gillian developed Novuna’s personal loan product, which launched in 2011, and has seen Novuna grow into one of the UK’s top ten providers.

Monday 16th January 2023

A personal loan from Novuna Personal Finance is a great way to get access to extra cash when you need it. You might not have the funds to pay for a big-ticket item or once-in-a-lifetime experience upfront but, by taking out a personal loan, you’ll be able to make your dreams happen by simply paying your loan back in fixed-rate monthly instalments instead.

If you’re not familiar with how personal loans work and how they could help you fund your goals, this guide will give you all the information you need. You can also check out our FAQs to find out even more.

How does a personal loan work?

Personal loans are a form of unsecured finance which gives you access to a large sum of money quickly, allowing you to pay it back in fixed-rate monthly instalments until the loan is settled.

Lenders such as Novuna Personal Finance make a decision on your personal loan application by assessing your creditworthiness and paying capacity, rather than by asking you to provide collateral to borrow against (such as your house or car).

All aspects of your loan are decided upon and agreed up front, at the point at which you sign the loan agreement. You’ll know your rate, how much you’ll need to pay back each month and the number of months over which you’ll make your repayment. This makes a personal loan a structured way to ensure you’re borrowing within your budget.

If you’re keen to find out more, here are the 5 things you need to know before you apply for a personal loan.

What’s the difference between a personal loan and a credit card?

Unlike a credit card, personal loans have a fixed rate and monthly repayment amount. This means you’ll always pay the same amount every month for the duration of your loan term, which helps you to better manage your monthly outgoings.

Read our guide for more information on the differences between a personal loan and a credit card here.

What can I use a personal loan for?

Personal loans make bigger purchases more affordable by allowing you to make fixed-rate monthly repayments instead of having to find a large sum of money upfront.

The means personal loans are most suitable for significant purchases rather than to top up funds or help to pay for day-to-day living expenses. You should always have an idea of exactly what you want to use your loan for before applying.

Some of the most common things our customers use their loans for include home improvements, financing a new vehicle, paying for a wedding or leisure activities such as an unmissable family holiday.

Whilst our loans are flexible, meaning customers can choose what they use the money for, there are some are some things we won’t lend you money for. This includes investing in cryptocurrencies or borrowing money for business purposes.

How much can I borrow?

Each lender is different but, with Novuna Personal Finance, you can borrow any amount from £1,000 up to £35,000 and repay it over a term of two to seven years. Read our guide on how much you can borrow with a personal loan for more information.

Will taking out a personal loan affect my credit score?

A hard credit check will be recorded on your report when you apply for a personal loan, regardless of whether your application is successful or not. This in itself shouldn’t impact your credit score, and the outcome of the loan application won’t appear on your report. But several inquiries on your credit report within a short space of time could be a red flag to a lender.

If you decide to go ahead and take out a personal loan, this will increase the amount of money you owe which may inhibit you being able to borrow more until you’ve cleared your current debt. You may find, though, that a personal loan could help to build up your history and prove to lenders you can manage debt responsibly – but only if you keep up your repayments.

What is the criteria for a personal loan?

Each lender has their own eligibility criteria when deciding whether to approve a loan, but most will ask you for similar information to ascertain your affordability.

Online loan applications usually ask for your employment details, annual income, bank account details and address history from the last three years. From this information, lenders will be able to build a picture of your debt history and financial circumstances which helps them to make a decision on whether you’ll be able to afford the loan repayments.

Am I eligible to apply for a loan?

At Novuna Personal Finance, we require applicants to:

  • Be aged 21 or over
  • Have a bank or a building society account
  • Have a good credit history
  • Be a permanent UK resident (and have been living in the UK for at least 3 years)
  • Be in permanent paid employment or retired with a pension

Whilst some lenders may be happy to lend money to those with a bad credit score, it’s important to us that our customers only take on debt we believe they can manage.

What does it mean when my application has been referred?

A referred loan application means that, at the point of submission, the data that we received was insufficient to make an instant Accept or Decline decision and must be reviewed manually.

Additional checks will be completed using the data we already have to see if we can make a decision. If not, we will contact you by telephone or email to ask you to provide supporting information such as bank statements or proof of income.

How do I apply for a personal loan with Novuna Personal Finance?

It’s quick and simple to apply for an online loan with us:

      • Get a quote from our loan calculator
      • Fill out our online application form (it should take no longer than ten minutes)
      • Receive an instant decision
      • Read and sign your paperless loan agreement
      • If approved, the money can be with you in just two working days

Apply for a loan with us

All you need to know about personal loan interest rates

The questions we’re asked most by customers tend to focus on how much interest you’ll pay when you take out a personal loan with us. The rate you’ll be offered will largely depend on your credit score, combined with personal and financial circumstances, loan amount and term. Take a look at our guides for more information about understanding your credit score and how your credit history will impact borrowing.

How is my loan APR rate calculated?

The Annual Percentage Rate (APR) of your loan is calculated by combining the amount of interest with any additional fees included with your loan, allowing you to compare the cost of personal loans from different lenders.

As we don’t charge any additional fees, the APR and interest rate remain the same when you take out a loan with us. Read more about the difference between APR and interest rate here.

How much interest will I be charged on my loan?

You’ll be given a personal APR rate following your application. This rate will be decided by the lender, based on your credit history, personal circumstances, loan amount and term.

At least 51% of our customers receive our advertised rate of 7.4% on loans between £7,500 and £25,000.

Will my rate change if my circumstances change?

Your rate will be fixed for the full term of your agreement, so it won’t change even if your financial circumstances have.

If, for whatever reason, you do find yourself in financial difficulty, please reach out to our team who will do their best to help find a resolution that works for you. Take a look at the Money Worries section of our FAQs for more information.

Why did the advertised rate change when I submitted my application?

Whilst at least 51% of customers receive the advertised rate, you may be offered a higher APR based on your credit score and profile.

As a credit check is only carried out at the point of application, which gives us some of the information we need to make a lending decision, we’re only able to confirm what APR we can offer you once you’ve submitted a full application.

I have an excellent credit score, why didn’t I get the headline rate?

The rate you’re offered is not solely based on your credit score.

Every lender has their own criteria and is likely to also take into account other information received from your credit check, any history you have with the lender and your personal or financial circumstances.

Therefore, whilst it’s a good idea to keep an eye on your credit score, lenders will be looking at other factors when deciding on the rate they can offer you.

So there you have it! We hope you’ve learnt a little more about what personal loans are and how a loan might be able to help you achieve your goals quicker. If you’d like to find out more, contact our friendly team or follow us on Facebook.

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