Small Loans

A small loan can be used for virtually anything you like. If you’re planning to spend between £1,000 and £7,500 a small loan may be ideal.

You might be perfecting a proposal, planning a celebration or shopping for a special gift. Or you might have received a bill you weren’t expecting. Our flexible small loans are tailored to suit you, so you can choose what you want to spend the money on.

At Novuna Personal Finance, we also offer a range of specialist personal loans. If you’re looking for a larger loan up to £35,000, take a look at our car finance, home improvement loans and holiday loans.

Find out how you could use a small loan.

Before you apply for a small loan, you should make sure that you fulfil our lending criteria. You must

• Be aged 21 or over
• Have a good credit history
• Have a bank or building society account
• Be a permanent UK resident (and have been living in the UK for at least three years)
• Be in permanent paid employment, self-employed or retired with a pension
• Have an income greater than £10,000

Small personal loans are not payday loans. There are several key differences:

• You usually have to repay a payday loan much quicker – usually on your next payday
• As you can’t spread the cost over a longer timeframe, the individual payday loan repayments are usually more expensive
• The interest rates on payday loans are typically a lot higher
• The amount you’re able to borrow using a payday loan is often smaller compared to how much you can borrow with a small loan

With a small personal loan, you can benefit from our low interest rates. You can also spread your repayments over a longer period (at Novuna Personal Finance, we offer repayments terms of 2 to 5 years).

Taking out a small loan will increase the amount of money you owe which could limit the amount you’re able to borrow until you’ve cleared your current debt.

If you keep up with your repayments and manage your money responsibly, this could actually reflect positively on you in the future though and could in fact improve your credit score over time.

Applying for a small loan could impact your credit score, too. While your credit file won’t show the outcome of any applications, lenders will be able to see each hard check that is recorded on your report.

A large number of applications in a short space of time could affect your ability to get credit. So, if you have been declined for a loan, we recommend avoiding applying again until you’ve investigated why your application may have been declined. You may need to take steps to improve your credit score or correct any errors on your credit report.

For more information please read our guide on how your credit history could affect your ability to borrow.

When you take out a small loan, you’ll need to pay back the full amount you borrowed plus interest charges. Our loans are fixed-rate, which means the rate won’t change for the duration of your loan term. You’ll always pay the same amount back each month. This helps you to manage your outgoings as you’ll always know exactly how much is leaving your account and when.

The interest rate you’re offered will depend on your personal and financial circumstances, credit history, loan amount and term. If you have a strong credit history, you may find you’re offered a better rate as you’re able to prove you’ve managed debt responsibly in the past.

You may also find it’s more expensive to take out a small loan compared to a larger amount as lenders look to recoup the cost of providing the loan. As the APR is likely to be higher for small loans, you’ll need to pay a larger amount of interest.

To get an idea of how much a small loan could cost you each month, or how much interest you might pay in total, check out our loan calculator.

Small loans are a type of unsecured personal loan. Unsecured loans allow you to borrow money without putting up collateral, such as your house or car. The lending process is therefore much simpler, with the lending decision based entirely on your personal and financial circumstances, credit history, loan amount and term.

As you don’t need to put up any collateral, your lender won’t be able to seize these assets if you fail to make your repayments.

Missing or making late payments on either a secured or unsecured loan will be recorded on your credit file, though. This could make it more expensive to borrow and could even affect your chances of getting a loan in the future.

Find out more about the difference between unsecured and secured loans here.

Yes. When you apply for a Novuna Personal Finance loan on our website, you’ll be borrowing money from us directly.

Borrowing from a direct lender is just one of the many advantages to choosing Novuna Personal Finance.

There are some alternatives to getting a small loan:

• Dip into your savings. While you may want to keep your nest egg intact, using your savings to pay for an unexpected expense or one-off big purchase could save you paying interest rates.
• Save up and pay in cash. If you have the option to wait (for example, if you want to book a holiday or buy a big-ticket item), you could avoid paying interest charges by simply waiting for your savings to build.
• Use a credit card. This could be a suitable option if you need access to additional funds immediately, or if you want to pay for several smaller purchases on a rolling basis rather than borrowing a set amount. Find out more about the difference between personal loans and credit cards to help you make a more informed decision.

It’s not recommended to take out a small loan to pay for day-to-day expenses or several small purchases. Some customers may find using a credit card or a current account with an interest-free overdraft more suitable for these kinds of purchases.

You may also have heard of payday loans, same day loans and short-term loans. These are not the same as a small loan and need to be considered carefully, as often these other types of loans come with inflated APR rates and expensive fees if you do miss or make a late payment.