What an unsecured personal loan means
An unsecured personal loan is a loan you repay in fixed monthly instalments without using your home, car or another asset as security. It can be considered for a clear, one-off cost when you have a realistic plan for the repayments.
With 118 118 Money, accepted customers can borrow from £1,000 to £8,000 and repay over 12 to 60 months. The amount, rate and term available depend on your individual circumstances. Before making a full application, you can check whether you are likely to be accepted without affecting your credit score.
Borrowing is a serious commitment. The best starting point is not how much you could borrow, but whether the monthly repayment fits after your essential costs and existing commitments are covered.
Work out what you need to borrow
Start with the specific cost you need to cover. Add up the full amount, including any related fees, and subtract any savings you can use without leaving yourself short for essentials.
Keep the purpose clear. A defined, one-off cost is easier to plan for than borrowing to cover an ongoing shortfall.
Borrow only what you need. A lower amount may reduce the pressure on your monthly budget and the total cost of credit.
Check the whole cost. Include delivery, fitting, insurance or other related costs so you can make an informed decision.
If you are considering borrowing for rent, food, household bills or payments you are already struggling with, a new monthly repayment may make things harder. Reviewing your budget, speaking to the company you owe or getting free, independent debt advice may be a better next step.
Focus on the repayment as well as the rate
The monthly payment is the part of a loan you need to manage repeatedly. List regular essentials such as housing, food, energy, travel, childcare and council tax, then include existing credit and other monthly commitments.
Compare that total with the income you can rely on in an ordinary month, leaving room for unexpected costs. If the repayment would mean missing another bill, using an overdraft or cutting back on essentials, the loan may not be affordable.
Our loan calculator can help you see how a different term may affect the monthly payment. A longer term can reduce the monthly amount, but may increase the total amount repaid.
What an eligibility check can tell you
An eligibility check gives an indication of whether you are likely to be accepted based on the information you provide. It is a useful first step when you want to explore an option without affecting your credit score. It does not guarantee an offer, an interest rate or a particular loan amount.
If you choose to continue, you will complete a full application. 118 118 Money will then carry out a fuller assessment of your circumstances, including affordability and credit checks. If an offer is made, check the amount, term, rate, monthly repayment and total amount repayable before accepting it.
Unsecured and secured borrowing are not the same
With an unsecured personal loan, you do not put up an asset as security. That is different from secured borrowing, where a lender may take security over an asset such as a home or vehicle. It does not mean there are no checks, or that an offer is automatic. A lender will still look at whether the repayments appear affordable and may carry out credit checks as part of a full application.
Unsecured borrowing can suit a defined expense where you want one fixed repayment and do not want to use an asset as security. The right choice depends on your circumstances, the amount you need and how confidently you can manage the payments over the full term.
It is worth being especially careful if you are comparing different kinds of credit. A lower monthly payment can sometimes come from spreading the borrowing over a longer period, which can increase the total amount repaid. Always compare the full cost as well as the payment due each month.
Choose a term that works for your budget
Your repayment term is the number of months you have to repay the loan. A shorter term can mean higher monthly payments, while a longer term may reduce the monthly amount but increase the total amount you repay. There is no automatically better option. The important thing is choosing a payment you can keep up with alongside normal living costs.
Before continuing, consider what would happen if an ordinary month became more expensive. Think about annual bills, travel, repairs, family costs and existing credit payments. If the repayment only works when everything goes exactly to plan, borrowing less or delaying the decision may be safer.
Keep a note of the amount you need, the term you are considering and the payment you would be comfortable making. That makes it easier to compare an offer carefully rather than deciding in a hurry.
Consider the right way to pay for the cost
A personal loan is only one way to spread a cost. For a smaller purchase, savings or a supplier payment plan may be more suitable. A credit card may suit some purchases, but it works differently: the balance, interest and minimum payment can change over time, so it is important to understand the terms before choosing it.
For a larger, defined expense, fixed monthly repayments can make planning simpler. That does not make a loan right for every situation. Compare the options you can realistically access, look at the total cost, and choose the one that leaves your budget with enough room for essentials and unexpected costs.
Compare alternatives before deciding
Give yourself time to compare the monthly payment with the total amount repayable. For some costs, savings, a supplier payment plan, a credit union or another option may cost less or put less pressure on your budget.
For more about the product, visit our personal loans page. If you are concerned about existing borrowing, our money guidance can help you consider your next step.