A guide to personal loans

How much you can borrow really depends on your personal circumstances. It also depends on a number of other things, like:

• What the loan is for
• What your earnings are
• How long you've been in your job
• What your monthly outgoings are
• Your history of repaying previous loans, store and/or credit cards

In short, whether you qualify for a loan and for what amount, really does come down to a host of considerations.

A credit search will usually be carried out by the lender you apply through, which will give them a feel for your overall credit history. So the better it is, the better your chances are at being approved.

For a start, you'll need to be aged 18 or over to even be considered for a personal loan.

If you have a bankruptcy notice or any County Court Judgments filed against your name too, it's likely that they will interfere with your chances of approval. Ideally, to be eligible you'll need to have a good credit rating with a good repayment history, certainly if you want to be approved for a personal loan with the majority of reputable lenders.

You can use a personal loan for a host of purposes, like:

• Home improvements
• Holiday
• Car
• Debt consolidation (Call us on 0800 66 00 33 for assistance with your application or apply in Branch).

You can also consider a loan to fund your postgraduate education (the funds are usually paid directly to your university or college).

You have a variety of lending options available to you if you need an injection of capital that you just don't have to hand. How much you can borrow and at what rate of interest rate really does depend on both your personal circumstances and the lender you make your application with.

A Danske Bank personal loan is not available to buy property or land (not even the deposit); for any speculative purpose (such as investments, stocks and shares, or gambling); for any business purpose; to fund living expenses, or for anything illegal.

You may be able to settle (or redeem) your loan early, but that depends entirely on your loan provider and the conditions by which they offered you the loan in the first instance. To inquire about early settlement, contact your lender to request a 'settlement figure' and speak to them directly if you have any questions once you've received it.

Some lenders may charge you an 'exit' fee, others may apply additional interest charges, so it's important that you read the Terms and Conditions fully before you take the loan out. That way, you'll know exactly where you stand if you happen to come into a bit of money earlier than expected and wish to clear it in full.

There are significant differences between a personal loan and an overdraft. Here are the key differences:

An overdraft is designed to act as a buffer if you think that your current account is going to slip into a negative balance. It’s not really designed for day-to-day spending, more so as a safety net to help direct debits and standing orders to continue to be paid when the funds in your current account dip low. An overdraft can also be repayable on demand, meaning that the bank can come along at any time and ask you to repay it in full. They don't often do that, but in certain circumstance they will, if they feel there is a need to do so.

With a personal loan, you take out a fixed amount, with (usually) a fixed rate of interest. Your monthly repayments are also fixed, allowing you to budget from month to month, which is really handy when it comes to managing your money. You also take out a personal loan over a specific period of time and generally keep the loan repayments going until you have paid the loan back in full; unless you have the means to pay it back earlier, as aforementioned. At Danske Bank UK, we also offer a variable rate Personal Loan for customers who hold a mortgage with us (terms and conditions apply). The interest rate is our Danske Bank Standard Variable Rate (UK) which means your loan repayments may go up as well as down.

There are more variations between a loan and an overdraft but, in short, an overdraft is designed for short term cash flow management and a loan is typically for a structured purchase that you repay at a fixed sum each month. That should give you a feel for the key differences.