Things to consider when taking out a personal loan

Things to think about when taking out a personal loan

A loan can be a useful way to borrow money as it would be a fixed amount. You'd then pay the money back by spreading the payments over a set period of months, known as the 'term' of the loan.

With a loan, interest is charged on the amount you borrow. So you'll need to pick an amount and term that you can afford.

The lender will look at your situation before they decide whether to offer you a loan. If they do, the lender will also decide how much to lend you and the interest rate they can offer, based on that assessment.

The lender will want to help you make a decision that is right for you and your money. Here are some things to think about when taking out a loan.


  • 1.
    What do I want from a loan?

    The handy thing with a loan is that you'll have the money you need to pay for the things you want. With an MBNA loan you can borrow between £1,000 and £25,000. You'll can also choose to spread the repayments over a term of 1 to 7 years. You just need to make sure you can meet the repayments over the term you choose. Your repayments are the fixed amount you must pay back every month.

    Loan interest rates can either be variable or fixed. The interest rate on an MBNA loan is fixed. This means your repayments won't go up so you can budget with confidence. You'll also have the freedom to make extra payments when you want to help pay back the loan sooner.

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  • 2.
    Making sure I can pay back the loan

    You'll need to make sure that you can make your repayments over the term of your loan. Have a think about how much you could afford to pay back each month without making life hard for yourself. Keep in mind you'll have to pay interest on what you borrow. This means you’ll pay back more than the amount you first borrowed.

    To make things easier, your repayments will come out of your account each month by Direct Debit. You just have to make sure you've got enough money in your account.

    The term you take the loan over will affect the amount you must pay back each month. If you want smaller repayments each month, you should take your loan over a longer term. Remember that the longer you take to pay back your loan, the more interest you’ll pay back overall.

    When you apply for a loan, the lender will usually ask a credit reference agency for your credit history. If you make several credit applications within a short time, this could have a negative impact on your credit rating. This could make it more difficult for you to be able to borrow from lenders.

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  • 3.
    Is there anything else to consider?

    As long as you keep up with your repayments each month, there's no need to worry.

    If you breach your loan agreement, the lender will charge you costs for recovering late or missed repayments. To recover debt the lender may also take any money you owe them from any other current or savings account you hold with Lloyds Bank plc. It’s worth knowing that this could affect your rating with credit reference agencies.

    You can pay back your loan in full or in part at any time during the term of your loan. If you pay off your loan early, the lender can charge you up to 58 days interest. This charge is known as an early settlement adjustment.

    Understanding the borrowing options

    Deciding to borrow may not just depend on how much you need to repay each month, or how long it will take to clear the debt. Using our online borrowing options tool could help you decide which type of borrowing may be right for you.


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Next steps

Find out more about MBNA loans

Get in touch

Sometimes the only way to sort something out is to get in touch. You can talk through your personal loan in more detail. You’ll find all the contact details you’ll need at our dedicated page.

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