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Monzo loan calculator
What is Monzo?
Monzo is one of the leading challenger banks in the UK and now offers personal loans through its popular app. Unlike traditional lenders, Monzo loans are online-only and you’ll need to create a Monzo account and download the app to apply for a loan.
Monzo loan rates at a glance
The Monzo Bank Personal Loan charges 26.6% APR representative on loans between £200 and £3,000. Monzo offers the loan with repayment terms between 2 and 5 years and applicants can apply to borrow from £200 to £3,000.
Overview of features
Monzo offers unsecured loans, which means you don’t need to use an asset as security against the loan. Instead, you’ll be approved for a loan based on your credit score and ability to pay back the loan amount. You can borrow from £200 up to £15,000, with a loan period of 2 to 5 years.
You’ll receive a fixed interest rate, so your monthly payments will remain the same throughout the loan and you’ll know in advance what it will cost overall. Your rate will vary depending on factors like your credit history and the loan that you apply for. Before it can offer you a loan, Monzo will check your credit history through the credit reference agency Transunion.
|Loan type||Unsecured Personal Loan|
|Loan amounts||£200.00 to £3,000.00|
|Loan terms||2 Years to 5 Years|
|Loan rate type||Fixed|
|Same day funding available|
|Instant decisions in most cases|
|Soft-search facility available|
|Overpay without penalty|
|Concurrent loans allowed|
|Topping-up pays off existing loan and initiates a new loan|
|Repayment methods||Direct Debit|
How do Monzo loans work?
You’ll need to be an existing customer and already have the app. Here’s the typical process for taking out and repaying a Monzo loan:
Monzo will then take automatic monthly payments from your current account in order to repay the loan. You can track how much you’ve paid, your remaining payments and the cost of the loan using the Monzo app.
Pros and cons
- Flexible loan amounts. You can borrow from as little as £200 or up to £3,000.
- Early repayment option. You can make extra repayments or even pay your loan off early without penalty.
- Simple online application. If you have a Monzo account, you can apply for a loan within minutes using the app.
- Fast funding. You can be approved for a loan and receive your funds the same day you apply.
- Online tracking. You can manage your loan using the Monzo app.
- Only available to Monzo customers. You’ll need to have an existing Monzo account, or sign up for one, to apply for a loan.
- Minimum credit rating required. You’ll need to have a certain credit score and history to be eligible for a loan. You can check your credit score through Credit Karma using your Monzo app.
- High APR on smaller loans. Be wary of borrowing small amounts over lengthy periods – this makes for low monthly repayments but a relatively high overall cost.
What is APR?
The Annual Percentage Rate (APR) is a representative figure that’s designed to show you the annual cost of a loan. It can be a handy tool when comparing different loans, but don’t let it distract you from the overall cost. The APR combines both the interest rate and any mandatory fees or charges that you’ll need to pay on the loan.
Lenders such as Monzo must all calculate their APRs in the same way and must provide you with this figure before you agree to anything. However, most people don’t realise that lenders only have to offer the advertised representative APR to 51% of customers who take out the loan. That means you may end up paying more, depending on Monzo’s assessment of your financial circumstances and history.
Am I eligible for a Monzo loan?
You’ll need to meet the following criteria to be eligible for a Monzo personal loan:
- You must be at least 18 years old.
- Be a UK resident.
- Have an existing Monzo account.
- Meet Monzo’s minimum credit history and credit score requirements.
What credit score do I need to get a Monzo loan?
Monzo typically offers loans to applicants with high credit scores. It's important to note that your credit record is just one factor that Monzo will consider, however if you don't have a high credit score, you're very unlikely to get approved for a Monzo loan.
A "Good" or "Excellent" credit rating would require a score of 881 or higher, if you're referring to Experian's scale, 420 or higher if you're referring to Equifax's scale and 604 or higher if you're referring to TransUnion's scale.
Do Monzo loans give an instant decision?
Yes, Monzo offers instant decisions online in most cases (occasionally more info may be required). First, you can use the soft search eligibility checker to find out your chances of getting approved (this won't affect your credit score). Then, if you opt to go ahead and apply, you'll get an instant answer. Monzo can also offer same-day funding of your loan.
Can I get a second Monzo loan?
Monzo doesn't allow you to run multiple loans at the same time.
Can I make overpayments on a Monzo loan?
Yes, you can make overpayments without incurring any penalty fee. However Monzo can continue to charge interest for up to two months on any sums overpaid, so although making overpayments stands to save you money in interest, you may not save quite as much as you'd imagined.
Frequently asked questions
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