The Personal Loan Bible – Everything you need to know

Money 2018-11-19

Personal loans are a popular payment option, but how much do you really know about the borrowing process, and how can you be sure that you’re getting the best deal?

The world of personal lending can be overwhelming with so many different options available. That’s why we have put together the ultimate guide to personal loans, to try make the lending process simpler, and to make sure that you’re completely in the know before you sign on the dotted line.

What is a personal loan?

A personal loan is money borrowed from a lender - usually a bank, finance company or credit union - that is repaid monthly. Many agreements include a fixed term and rate of interest, so you know exactly how much the total amount payable is with no nasty surprises.

What’s the difference between secured and unsecured personal finance?

Simply put, secured finance is when you borrow to purchase something specific, which you could be at risk of losing if you don’t stick to the terms of your agreement. Unsecured personal finance isn’t tied to a specific purchase, such as a personal loan.

For further information on this and more, watch our video below:

What’s the difference between fixed and variable APRs?

As the name suggests, a fixed APR does not fluctuate during the agreed term, offering more transparency when it comes to how much you will repay each month and throughout the life of the loan.

A variable APR will change with the index interest rate. This means that the interest rate on the amount you have borrowed can change during the loan period depending on the market performance.

What’s the difference between a personal loan and a credit card?

A personal loan is a more structured way of borrowing, as you’ll receive the full amount you need upfront then a monthly payment plan will be set up. As the interest is factored in at the start, it leaves you in a good position for budgeting.

A credit card is classed as ‘revolving credit’, which in general terms means that when a payment has been made, credit has been freed up to use again.

Why is it important to have a good credit rating?

Having and maintaining a good credit rating is crucial when it comes to lending. Not only will it show potential lenders that you’re reliable when it comes repaying what you owe, but you’re also more likely to get a competitive interest rate if your credit rating is good.

Reputable lenders will look at your credit score and your spending habits before they accept your loan application to assess whether or not you hit their criteria as a good customer. If your report shows that you are using your credit responsibly eg. Not spending to the limit on credit cards or missing payments, they are more likely to lend to you. 

If you need some guidance on how to improve your credit score, then check out our ‘Do's and don’ts’ for a healthy credit report’ article.  

What is responsible lending?

All financial providers are expected to exercise responsible lending in accordance with the FCA’s guidelines so that their customers are protected when they take out a loan. This means that the company will act in the customer’s best interests when it comes to affordability, changes in circumstances, vulnerable customers and being transparent with their T&Cs.

What does Hitachi Personal Finance offer?

Here at Hitachi, we offer our customers a range of personal loans to provide a helping hand with some of those bigger life purchases such as a new car, home improvements or to celebrate a special event. Our loans start from just 3.3% APR Representative between £7,500 and £25,000. To make it even easier, to get a quote, we have a simple to use Loans Calculator.

If there is something we haven’t covered or if you have any questions about our loans, please contact our customer service team on 0344 375 5500 or if you prefer to send us a message, email us at

Hitachi Hints and Tips is intended to be informative and interesting. It does not constitute financial advice, and you should always do further research when making any financial decisions. All information was correct at date of publication.

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