Personal Loans
A personal loan is a sum of money that you borrow from a lender, usually a bank, building society or some other financial institution. Ordinarily, you will receive a lump sum. In return for this, you agree to make regular repayments, usually monthly.
Your personal loan may be an unsecured loan, that is to say, the lender is taking no guarantee against the loan being repaid other than your ability to make the payments. A secured personal loan has the icing on the cake for the lender that you have put up an asset you own as surety for the loan. This means if you don't make the payments the lender could be entitled to force the sale of the asset to get its money back. Most secured loans are secured against your home, effectively operating as a second mortgage.
Assuming you have taken out a repayment loan, which will usually be the case, some of the money you pay each month will go towards servicing the loan, paying interest, and the rest of your payment will be used to pay off part of the capital sum and to reduce the outstanding debt.
The Financial Services Authority does not regulate Personal Loans