When it comes to choosing the right finance option, personal loans are a great choice for those wanting a flexible arrangement with a fixed APR and therefore, a fixed monthly repayment.
However, before signing on the dotted line, it’s important to understand how a personal loan works, so, here at Hitachi Personal Finance, we’ve answered all the important questions on our personal loans to help you make the right decision.
How does personal loan work?
Personal loans are a form of unsecured finance. Lenders will assess your creditworthiness and paying capacity via your credit report and open banking, rather than asking you to provide collateral to borrow against, such as a car.
Unlike a credit card, our personal loans have a fixed rate and monthly repayment amount meaning you’ll always pay the same amount every month for the duration of your term with no nasty surprises.
As all the terms of your agreement are agreed up front; such as your rate, the number of months over which you will make your repayments and the repayment amounts, this is a structured way to ensure you're borrowing within your budget.
What can I use a personal loan for?
Personal loans are a great way to fund a whole range of purchases in a way that makes repayments manageable.
Some of the most common things our customers use their loans for include: home improvements, financing a new vehicle, paying for a wedding, leisure activities like a holiday, or consolidating high interest debts into a more affordable payment.
However, as you would expect, there are some things we won’t lend you money for, such as investing in cryptocurrencies, or for business purposes.
What do I need to apply for a loan?
Each lender has their own criteria when deciding whether to approve a loan, but most will ask you for similar information. Online loan applications usually ask for your employment details, annual income, bank account details and address history from the last three years.
At Hitachi Personal Finance, we require applicants to be aged 21 or over with bank or a building society account, a good credit history, a permanent UK resident and be in permanent paid employment or retired with a pension.
How much can I borrow?
You can borrow any amount from £1,000 up to £25,000 and repay it over a term of two to five years.
How is my loan APR rate calculated?
We calculate the Annual Percentage Rate (APR) of your loan by combining the amount of interest and any additional fees included with your loan. This gives you a more accurate repayment amount. And if there are no fees, as is the case with our loans, the APR remains the same as the interest rate.
How much interest will I be charged on my loan?
Our low-rate personal loans start from just 3.2% APR Representative between £7,500 and £25,000 and your rate will be fixed for the full term of your agreement.
Most of our customers receive the advertised rate, but this may vary depending on your personal credit history with us and other lenders.
I have an excellent credit score, why didn’t I get the headline rate?
The rate you are offered is based on your credit score including all the other information received from the credit check and any history you have with us as a lender.
Every lender has their own criteria with regards to generating a credit score and so this will not necessarily be the same as what you see when you use one of the credit bureaus to check your score.
Why did the advertised rate change when I submitted my application?
The advertised rate is a representative APR. This means that at least 51% of paid out agreements are at this APR and other applicants may be offered a higher APR based on their credit score and profile.
It's only at the point when your application is submitted that we do our checks and are therefore able to let you know what APR we can offer you based on your credit information.
What does it mean when my application has been referred?
When an application is referred, this means that at the point of submission the data that we received was insufficient to make an instant Accept or Decline decision.
Referred agreements are then reviewed by an individual who will complete additional checks using the data we already have to see if we can make a decision. If not, we will contact you by telephone or email to ask you to provide supporting information such as bank statements or proof of income.