Compare Personal Loans Ireland
Reach your next goal with a personal loan
When you’re ready to plan that big wedding, buy a new set of wheels or consolidate debt you already have, a personal loan could help you cover the upfront cost. Understanding exactly how personal loans work is key to getting the best interest rate and repayment terms possible. This guide shows you how to compare top online lenders to narrow down your loan options. We take you through the process – including how to get the best interest rate that you’re eligible for.
What is a personal loan?
A personal loan is money you borrow from a bank, online lender or credit union that you pay back with interest over a set period of time – usually between one to seven years. Your lender determines your loan amount, interest rate and fees based on factors like your credit score, income and debts you already have.
What can I use a personal loan for?
You can use a personal loan to cover almost any large expense or even to consolidate your debt. A loan can help you reach your next goal, whether it’s buying your dream car or boat, taking care of financial obligations like bills, or funding your next big purchase.
What types of personal loans are there?
Unsecured term loans
This is your standard personal loan, where you receive a lump sum of money that you repay over a fixed period of time.
You aren’t required to put collateral, such as your home equity or your car, on the line to qualify. However, lenders tend to see these loans as risky – they’re left with nothing if you can’t pay it back, therefore rates tend to be higher than secured loans.
Secured term loans
A term loan that you back with collateral such as your home, car, a savings account or valuable jewelry. Lenders typically see these loans as less of a risk and they often come with lower interest rates than unsecured loans.
What types of collateral can I use to back a loan?
Fixed-rate term loans
A term loan that comes with a set interest rate that never changes throughout the life of the loan.
Variable-rate term loans
A term loan that comes with an interest rate that is subject to change while you’re repaying your loan. Typically, interest rates on variable rate loans can start off lower than their fixed-rate cousins, but they aren’t guaranteed to stay that low.
Personal lines of credit
Get access to a revolving amount of funds – similar to a credit card but with a higher limit and typically lower expenses. Great for funding continuous projects that might come with unexpected expenses. These can also be secured or unsecured. You are only charged for the money you borrow from a line of credit, which means you can have it open and not use it until necessary without being charged.
Lenders offer car loans to buy a new or used vehicle or refinance your current auto loan.
There are multiple borrowing options to pay for school, including public and private student loans. Lenders also offer student loan refinancing to help you get a better rate on what you’ve previously borrowed.
Is a personal loan right for me?
Personal loans can help you out when you have a big expense coming up but don’t have enough money on hand to cover the original cost. They’re generally better for larger one-time expenses, since they come in a lump sum and are usually not available in amounts less than $1,000. They also require some planning, since the application process takes some time – usually at least a couple of business days. Personal loans can be difficult to qualify for if you’re unemployed or don’t have a steady source of income – you’ll need to prove that you’re able to pay it off to get approved. You could also have a hard time getting approved if you have a history of making late payments or have never taken on debt before. You need a good to excellent credit history to get approved for the most competitive rates.
You could, but it might cost a lot more if you need to cover a large one-time expense. That’s because credit cards often have higher rates than personal loans. However, if you need cash right away or only want to make a small purchase, using a credit card can be a better choice. That’s because personal loans can sometimes take weeks to be approved and disbursed.
I want a personal loan — where should I look?
- Direct online lenders.
These lenders offer straightforward application processes so you can conveniently borrow money online. If approved, your loan amount is deposited directly into your bank account.
Brokers can pair you with a lender that suits your needs. After you fill out a preliminary application with the broker, you’ll be matched with a lender who offers the loan type you’re looking for in the amount you need. The lender must still make a decision on your application before you receive your funds. You won’t need to research lenders yourself if you choose this route
- Banks and credit unions.
If familiarity is important to you, you can consider getting a loan through the credit union or bank you already have a relationship with. The application process may be expedited if you have an existing account with the institution. Keep in mind that banks and credit unions tend to have stricter eligibility criteria than other lenders, however, if you have a long history with them, this might work in your favour.
- Peer-to-peer lenders.
Relatively new to the financial market, peer-to-peer lenders operate as marketplaces that bring investors and borrowers together. They facilitate the loan process between individuals rather than offering the loans themselves. Your loan can be funded by one or many different investors.
How much do personal loans cost?
Two main factors contribute to your loan’s cost: interest rates and fees.
- Interest rate.
This is what the lender charges you to borrow money and is usually a percentage of the loan amount.
There are a few fees that can add to the cost of your loan. It’s common to see administrative or processing fees of between 1-3% of the loan amount. Watch out for early repayment penalties if you plan to pay your loan off early. Lenders may also charge for late or missed payments and unsuccessful or failed payments.
Your annual percentage rate (APR) is an expression of your interest rate and fees together as a percentage. Your APR can give you an idea of how much your loan is going to cost you in total. APR doesn’t include late fees, insufficient funds fees or early repayment penalties.Back to top
5 tips for getting the best rate on a loan
- Compare your options
If you have a long history with a bank or a credit union, you might want to consider borrowing from that financial institution to take advantage of already being a member. However, online lenders offer a wide variety of loan types that may fit your needs better than what your bank can offer.
- Find out your credit score and review your credit report
You’ll generally need a score in the “good” range – 650 and above – to secure a decent rate. Your credit score and credit report are two different things. The latter is a detailed record of your credit history. Learn how to get a copy of your credit report and be sure to check for errors. Correcting errors, such as unpaid accounts that were actually paid, can help improve your credit score and help you get a better APR on a loan.
- Check rates before you apply
Loan applications may appear as inquiries on your credit report. Be sure to review the eligibility criteria to see if you qualify before applying for the loan. When comparing your options, you can also ask if the lender can give you a pre-approval before submitting your actual loan application. Asking questions before you fill out an application can help narrow down your options.
- Pay down your debt
Having a lower debt-to-income ratio is sometimes just as important as having good credit: It can improve the rates and repayment terms you’re ultimately offered. Aim to keep your debt-to-income ratio under 20%.
- Only apply for the amount you need
The amount you apply for has a direct influence on the rate you’re offered, so only ask for as much as you need.
What makes a personal loan competitive?
There are a few key features you’ll want to consider when comparing personal loans. To find the best loan for your needs, ask yourself these questions:
- Do I qualify for this loan? Don’t waste time researching a loan if you don’t meet the eligibility requirements. Applying for a loan that you’re not eligible for can negatively affect your credit score.
- Can I borrow the amount I need? Will you be able to take out the exact amount you need and can you afford to pay it back in a reasonable amount of time? If not, you might want to look elsewhere.
- Does it have a competitive interest rate? Look at the rate itself, but also consider whether it’s fixed or variable – variable interest rates are subject to change, while fixed are not.
- What are the fees? Most lender will charge fees for an application, administration, early repayment and late or insufficient funds.
- How long will I have to pay it back? Aim for a loan term that gives you monthly repayments you can afford without dragging the loan term out longer than necessary. Paying a loan off over a longer period of time will make it more expensive.
What lenders look for in a personal loan application
Lenders take on risk when they lend large amounts of money to borrowers. That’s why they require applicants to meet certain eligibility criteria. Here are some common qualifications lenders look for:
- Good to excellent credit. Most lenders rely on credit scores when choosing borrowers to approve, and even calculate specific loan terms based on credit scores. If you have poor or no credit, a personal loan may not be for you since you likely won’t meet the minimum credit score criteria. If you have poor credit, check out our guide on bad credit loans to see your options.
- Low debt-to-income ratio. You can calculate your debt-to-income ratio by dividing your monthly debt payments by your monthly income. Lenders can rely on this number as much as your credit score and normally don’t accept anyone with a ratio above 43%. A good ratio is anything below 36% although, as we mentioned before, under 20% is ideal.
- Employment. Most lenders require you to be steadily employed. Some lenders have minimum income requirements as well that can include wages, investments, pensions or any other form of funds coming in on a regular basis.
- Local citizen or a permanent resident. If you’re a citizen or a permanent resident, you’re able to apply for personal loans. Landed immigrants and temporary residents are only eligible to apply with certain lenders but may need to build up a credit history first. Having a valid local address is also important.
- 18 or older. You should be at least 18 years of age or the age of majority in your province or territory.
Personal loan application checklist
The application process differs between lenders, but they’ll generally ask for the following:
- Proof of your identity, like a government-issued ID or passport
- Your Social Insurance Number and date of birth
- Pay stubs, tax returns and other income details
- Banking details for disbursing your funds and making automatic repayments
- Utility bill in your name or other proof of residence
How to apply for a personal loan step by step
Step 1: Figure out how much you need to borrow
The first thing you need to do once you decide to apply for a loan is to determine exactly how much money you want to borrow. Borrowing too little or too much could leave you either unable to cover your costs or with extra money that increases how much you pay in interest.
Step 2: Choose a loan type
There are quite a few loan types available, but beyond that, ask yourself what you’re looking for within your loan type. Do you want a secured or an unsecured loan? Do you want a fixed or a variable interest rate?
Step 3: Shop around
The first lender you come across may not have the best deal. Shop around and make sure to compare things like APR, fees, turnaround time and term of the loan. Be sure to read the eligibility requirements of each lender as well to make sure you qualify before submitting an application.
Step 4: Apply
Applying for a personal loan is typically a quick and straightforward process that goes something like this:
- Personal details. Gather the necessary information such as proof of identity (passport, driver’s licence or other valid government-issued ID), proof of address (utility bills or lease) and proof of income (pay stubs or bank statements).
- Loan application. This is where you request a certain loan amount, specify what you want the loan for and choose your terms. Many banks and lenders have applications online, so you avoid the hassle of having to go to a branch and fill out paperwork. If you prefer to do it in person, head to a branch or a lender’s physical store location if they have them.
- Loan agreement. If you’re approved, sign the loan documentation and agree to all of the terms.
Step 5: Receive your funds
Many lenders require that you have a working bank account to receive your money via direct deposit, but that’s not always the only option. Some lenders may be able to send you a cheque in the mail.
Step 6: Spend your money
If you take out a loan for something specific, such as a new car purchase or debt consolidation, the lender may send the funds directly to the company you owe. If you take out a general personal loan, the funds will go to you to use for the purpose specified in your application.
Step 7: Make payments on time
It’s important to make your repayments on time so you don’t end up paying extra fees. Be sure to verify how you will be required to make repayments. Can you pay by phone with a credit card or account number? Is there an automatic payment option?
Paying off a personal loan
So you’ve been approved and the money is in your bank account. You’re done, right? Not quite. Now you have to pay it back.
Set up autopay
Many lenders, especially online lenders, require you to set up automatic withdrawals from your bank account. Others might give a discount on interest if you set it up. Automated payment is a great way for you to make sure you don’t miss any repayments, but don’t think you can just forget about your loan. If your account doesn’t have enough money to cover your repayment, you could be slapped with an insufficient funds fee.
Stay in touch
It’s a good idea to stay in touch with your lender, especially if you run into any trouble making repayments. Many lenders are willing to renegotiate your loan if you have an unexpected financial problem. You won’t know until you ask and you’d be surprised how willing many lenders are to help you out in your times of need. The fastest way to get in touch is usually by phone. Some lenders also have a live chat option, but those are generally better for finding basic information.
Pay it off early
Most personal loans have interest that accumulates during your loan term, but some require you to pay most of your interest in the first few months. With the first type of loan, check if your lender charges early repayment fees. If not, you can save on interest by paying off your loan early. Paying off your loan early has other benefits: It can get you out of debt faster and improve your debt-to-income ratio.
Frequently asked questions about personal loans
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