If you need more than a few thousand pounds for a renovation, debt consolidation, or a big purchase, a large personal loan might look tempting. It’s a lump‑sum loan that usually ranges from £10,000 up to £50,000 or more, with a fixed interest rate and set monthly repayments. Before you sign, understand the basics so you don’t end up paying more than you can afford.
Most people turn to a large loan when other options feel too risky or unavailable. For example, you might have a solid credit score but not enough equity for a home‑equity loan, or you need cash fast without selling assets. A large personal loan can also be cheaper than a credit card if you lock in a lower rate and pay it off in 3‑5 years. Just make sure the loan purpose aligns with a clear repayment plan – borrowing to cover everyday expenses usually ends up costing more.
Key signs you’re ready for a big loan include steady income that comfortably covers the new payment, a credit score of 680 or higher, and a low debt‑to‑income ratio (under 35%). Lenders will look at your employment history, existing debts, and how much you’ve saved for a buffer. Having a solid budget that shows you can meet the monthly amount is the best proof you’re a low‑risk borrower.
Shop around. Different banks, building societies, and online lenders offer varying rates, fees, and loan terms. Use a simple comparison tool to line up APR, origination fees, and any early‑repayment penalties. The lowest headline rate isn’t always the cheapest if the lender tacks on a high fee.
Boost your chances by improving your credit score before you apply. Pay down any high‑interest cards, correct errors on your credit report, and avoid new credit inquiries in the month leading up to the application. Even a 20‑point jump can shave 0.2% off the APR, which adds up over a £30,000 loan.
Consider the loan term carefully. A longer term reduces the monthly payment but increases total interest. For a £25,000 loan at 7% APR, a 3‑year term costs about £3,400 in interest, while a 5‑year term jumps to roughly £5,300. If you can afford a higher payment, a shorter term saves you money.
Watch out for hidden costs. Some lenders charge an upfront arrangement fee, usually 1‑2% of the loan amount, which is added to the balance. Others impose a fee for early repayment – great if you plan to pay it off faster, but a surprise if you don’t. Read the fine print and ask the lender to explain any charge you don’t understand.
Lastly, think about alternatives. If you own a home, a secured loan or mortgage extension often offers lower rates because the lender has collateral. A 0% balance transfer credit card can work for smaller portions of the loan if you can clear it before the promotional period ends. Weigh the pros and cons of each route before committing.
In short, a large personal loan can be a useful tool when you need a big sum quickly and have a solid repayment plan. Do your homework, compare offers, and keep an eye on fees to make sure the loan helps you reach your goal without hurting your finances.
Everything you need to know about borrowing $100k from a bank: detailed steps, smart tips, approval requirements, and pitfalls to avoid. Updated for New Zealand in 2025.