Question 1

What's the difference between APR and interest rate?

Accepted Answer

APR includes mandatory fees and shows the true annual cost of the loan. Interest rate is just the cost of borrowing without fees.

Question 2

Should I consolidate my debts?

Accepted Answer

Consolidation can save money if the new APR is lower and you don't add years to the term. Always check fees and early-repayment costs.

Question 3

Are 0% credit card balance transfers worth it?

Accepted Answer

Yes if you can clear the balance during the 0% period. Watch the transfer fee (typically 2-3%) and the post-promo APR.

Question 4

Is PCP cheaper than HP?

Accepted Answer

PCP usually has lower monthly payments but you don't own the car at the end unless you pay the balloon. HP is more expensive monthly but ends with ownership.

Question 5

What credit score do I need for a personal loan?

Accepted Answer

Best rates need 'Good' or 'Excellent' (Experian 881+, Equifax 531+). 'Fair' (Experian 721–880) qualifies for most loans but at higher APRs. Below 'Fair' expect guarantor or specialist lenders only.

Question 6

What is a soft search vs a hard search?

Accepted Answer

A soft search (eligibility check) doesn't affect your credit score and isn't visible to other lenders. A hard search (actual application) leaves a footprint visible for 12 months and can knock 5–10 points off.

Question 7

How long does a default stay on my credit file?

Accepted Answer

Six years from the date the default was registered, regardless of whether you later pay it off. After 6 years it drops off automatically and lenders can't see it.

Question 8

Can I be refused a loan with no credit history?

Accepted Answer

Yes — 'thin file' applicants are seen as higher risk. Build history with a credit-builder card, electoral roll registration, current account in your name and a few months of on-time direct debits before applying.

Question 9

What's the maximum personal loan I can get in the UK?

Accepted Answer

Mainstream lenders cap at £25,000–£50,000 unsecured. Anything above is usually secured against property. Approval depends on income — typically lenders won't go above 4–5x annual net income.

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