You might be considering a personal loan, but find yourself asking questions such as where you can get a loan, how you can repay it, and if there are any alternatives.
There are also a few different providers to choose from, with their own interest rates and criteria to meet.
That’s where bonkers.ie comes in to help. We’ve written this guide to answer your most common questions so that you can find your way to the perfect personal loan that fits your exact needs.
1. What is a personal loan?
A personal loan is a sum of money that a lender gives a borrower. There can be a joint loan between two people, or a single loan.
A personal loan will have an interest rate attached.
For example, if you take out a €20,000 loan with a 5% interest rate, you’ll pay back the lender a total of €25,000 over five years.
2. How much can I borrow with a personal loan?
Most lenders allow you to borrow a maximum of €75,000 with a personal loan. Though some have a limit of €50,000.
When assessing how much you can borrow, your lender will take into account the purpose of the loan, your income, and repayment capacity.
Most personal loans must usually be paid back between one and five years. Though some may go up to 10 years. The purpose of the loan will dictate the term you can choose.
3. Where can I get a loan from?
Loan providers include:
- Credit unions
- Building societies
- Private companies and individuals
Each provider will have its own interest rates, criteria to meet, and conditions, such as maximum term length (the number of years you have to repay the loan).
Some providers allow you to take out online loans online on your computer or through your mobile phone. Others may require you to apply strictly in person.
When looking for a loan, consider:
- How much to borrow
- The total cost with any extra fees
- Charges for early repayments
- The Annual Percentage Rate (APR), or interest rate
- Term length - generally, the faster you can repay your loan, the cheaper it will be
4. Can I take out a loan for my mortgage deposit?
The Central Credit Register (CCR) keeps a record of all loans.
Your lender will use the CCR to find any loans you have taken out for a deposit and reject your application.
A lender needs to see that you can save money for a deposit and mortgage repayments.
5. How can I pay back my loan?
Lenders may require you to repay your loan via cash, cheque, or more commonly, direct debit or standing order.
For this, you will need an appropriate current account.
If your current account does not make this process easy, consider switching current account providers.
6. Can I pay off my personal loan early?
There might be an early repayment fee attached though.
This is because lenders expect to make a profit from your interest rate over a set period of time.
However, if you pay your loan back early, they will lose some money and will reclaim some of it through an early repayment fee.
7. What do I need before applying for a loan?
If you apply for a loan with your current bank, they will require evidence of your Personal Public Service Number (PPSN).
Your lender will use the CCR to check any previous or current loans you have, to check your credit worthiness, and to help assess your loan application overall.
They will also use a copy of your current account statement to check your rent/mortgage, bills and income.
As stated in question 4, if you apply for a mortgage, the lender will use the CCR to check if you have taken out a loan to pay for a mortgage deposit.
If you have, your mortgage will be rejected.
Applying for a loan with another lender will require:
- Proof of identity such as a passport.
- Proof of residence such as a utility bill (gas, electricity, broadband).
- Proof of income such as bank statements or a wage slip.
- A document which shows your PPSN such as a Public Services Card (PSC), or PAYE notice of tax credits.
8. When will I hear back from my loan application?
If you apply for a loan with your main bank, you may be able to get instant approval or same-day approval if you apply online.
If your application requires that you submit documents or provide extra information, then this may delay things.
9. What is a green personal loan?
This is where the lender believes the loan is for something environmentally friendly, such as electric vehicles or solar panels.
Green loans are generally not cheaper than standard loans, but some suppliers offer reduced rates.
To apply for a green loan, you may need the same documents as a standard loan, and possibly:
- Proof that at least 50% of your loan will go towards green improvements.
- The Sustainable Energy Authority of Ireland (SEAI) Declaration of Works document if availing of SEAI energy efficiency grants.
10. How does the bonkers.ie personal loan calculator work?
When you arrive at our personal loan page, enter the amount you need to borrow, up to €75,000, and for how long you want to borrow, up to ten years.
Our personal loan calculator will then find the best rates available to you from providers, including information such as:
- Interest rate
- Total repayment
- Monthly repayment
- The ability to apply online
- If there are any setup fees
- An option to defer repayments
- Whether unscheduled repayments are allowed
- Possibility of setting your own repayment schedule
- If the loan is available for cars and/or home improvements
- Any personalised pricing options (best rate depending on your financial profile)
- Whether there are flexible repayments (clear your loan early and pay less interest)
You can then compare and contact providers.
11. What’s the difference between a loan provider and a moneylender?
In question 2, we listed common loan providers.
You can also use a moneylender, which is similar, but not the same.
A loan provider, such as a bank, typically gives a loan of any size, over different term lengths, with average interest rates.
Moneylenders typically give small loans, over short periods of time, with high interest rates.
Sometimes these rates are over 23%, according to the CCPC.
All moneylenders must have a moneylenders licence. Licenced moneylenders can be found at registers.centralbank.ie.
The granting of a 12-month moneylender's licence will mean that a moneylender's information will be available online, including:
- Maximum APR
- Cost of credit
- Terms and conditions
- Restrictions applied to the firm
12. What is bad credit, and can I get a personal loan with bad credit?
Your credit worthiness is a representation of your ability to repay owed debts for:
When you apply for a loan, the lender may perform their own credit check using reports from the Central Credit Register (CCR) for:
- How many loans you have
- How often you make late payments
- Whether you’ve paid your credit back on time
- If you’re in arrears or have previously been in arrears
Based on this information, the lender will decide:
- If they will lend to you
- The interest rate of your loan
- The loan amount
Since each lender has its own criteria for a borrower to meet, the approval of your personal loan will depend on the lender.
You can check your credit record on the CCR website.
13. How do I improve my bad credit score?
You can add a 200-word statement to your credit report on the CCR, explaining any special circumstances leading to any late or missed payments.
If your report has any mistakes, contact your lender or the Central Bank to have them corrected.
Other actions you can take include:
- Always pay on time and in full
- Clearing any arrears you have
- Reducing any outstanding credit
- Wait before applying for more credit to reduce your chances of your loan being rejected
- Understand and meet a lender's criteria to reduce their credit checks on you. Too many credit checks can negatively impact your credit score
14. Are there any alternatives to personal loans?
Yes, there are numerous alternatives:
- 0% purchase credit card: This allows you to make purchases without additional fees, so long as you can make your repayments within the 0% purchase period.
- Secured loans: Any savings or investments you have are used as security against the loan. If you can't repay your loan, your savings will act as payment. Secured loans sometimes have a reduced interest rate.
- Cash loans: Known as tied loans, require you to use your savings as security for your loan. If you default on your payments, your savings will act as payment.
- Guarantor loans: Someone agrees to make your repayments if you default (unpaid debts).
- Equity release loan: In this case, your mortgage has been fully repaid and you decide to use your home as security for a new loan.
Find the best personal loans with bonkers.ie
Our free, personal loan calculator, will search the Irish loan market for the best deal based on your loan requirements.
Discover the best support grants for your loans
- Considering a loan for a Battery Electric Vehicle? You might be eligible for a €5,000 grant from the SEAI.
- If you’re thinking of taking out a mortgage to renovate a derelict property, you could get a grant of up to €30,000.
- Retrofitting your home? You have a few finance options available.
Get in touch
Centralbank.ie, centralcreditregister.ie, ccpc.ie, mabs.ie, citizensinformation.ie.