Personal loans guide

Personal loans guide

Getting a personal loan can help in times of financial difficulty provided it's done responsibly. However there are a few things to bear in mind if you want one. Read on for our guide.

Looking for the personal loan that works best for your personal circumstances but not sure where to start? Whether you want to better manage existing debt, buy a new car, deal with an unexpected expense or upgrade your home, a loan could help you take care of what matters to you without delay.

This guide will help you get a handle on how personal loans work. It covers everything from credit scores and interest rates to repayment terms. And features that could be a good fit for your needs, like next-day funds transfer and fee-free overpayments.

Get the facts about unsecured personal loans at Post Office. Learn how tools like the Fast Checker and Repayment Calculator can help you find out if you’re eligible for a loan and how much you could borrow. And find out what you’ll need to provide to apply online.

How do personal loans work?

A personal loan is a way of borrowing a lump sum of money and spread the cost with manageable monthly instalments over a fixed period of time. At Post Office, you can take between one and seven years to settle the balance.

Lenders and credit brokers must show the Annual Percentage Rate (APR) charged on loans. This includes interest charges and any costs associated with setting up the loan. APR affects the total amount you’ll pay back over the lifetime of the loan.

The interest rate you see advertised is representative – meaning it’s the rate offered to most people with a good credit rating.

The rate you’ll be offered depends on:

  • Your credit rating
  • Personal circumstances
  • Amount you want to borrow
  • Length of the loan


What is a credit score and how do lenders use it?

There are three UK credit reference agencies: Experian, Equifax and TransUnion. These agencies use your financial history to create a credit report. Your credit score is based on the information in that report.

Lenders and brokers like Post Office use your credit score to assess the level of risk involved in lending you money. Your credit score indicates how well you’ve managed the credit you’ve had to date, and if you’ll be able to pay back a loan in full and on time.

A high score tells a lender that you’re creditworthy and less of a risk. Your credit score can go up or down according to how you manage the credit you have at the moment.

What type of loan can I get at Post Office?

Post Office provides unsecured personal loans for £1,000 to £25,000 repayable over one to seven years. An unsecured loan enables you to borrow money without putting up an asset like your home or car as security.

A Post Office Personal Loan has a fixed rate of interest, which means your monthly repayments will be the same over the life of the loan. This could help make it easier to budget, as you’ll know exactly how much will leave your bank account each month.

How much will my monthly repayments be?

The amount of time you take to pay back a personal loan impacts your monthly repayments and the total cost of the loan. The longer the term, the lower the monthly repayments. But you will pay more in interest charges over the life of the loan, so the total cost will be higher.

Tools like the Repayment Calculator can help you find out how much you can afford to borrow. Compare and contrast loan repayment terms at a glance to get an idea of how much your monthly repayments could be on a Post Office Personal Loan. And if you can afford a loan in addition to your current outgoings.

What about loan features?

When looking for the personal loan that works best for you, remember to check loan features and benefits. These vary from lender to lender.

At Post Office, you have access to the following loan features:

  • Check the likelihood of getting a loan without impacting your credit score
  • Apply online in minutes
  • Get an instant decision (in most cases)
  • Next-day funds transfer is available
  • Make fee-free overpayments when you can afford to
  • Choose which day of the month to make your repayments
  • Pay the loan off early at any time – just ask for a settlement quote


Am I eligible for a personal loan?

Each lender has different criteria. You can apply for a Post Office Personal Loan if you’re:

  • A UK resident and have been for at least three years
  • Over 21 years old – and 70 or under when your chosen loan term ends
  • Employed with earnings of at least £12,000 a year
  • A UK bank or building society account holder
  • In receipt of a good credit score


Making many loan applications over a short period of time can affect your credit score. So how do you find out if you’re likely to be approved for a loan before you go ahead and make a formal application?

The Fast Checker is a tool that gives you a score and indicates how likely it is that your Post Office Personal Loan application will be successful. All you need to do is provide a few basic details, like your address and employment details. The Fast Checker performs a soft credit check, which doesn’t affect your credit score or ability to get credit in the future.

How do I apply for a personal loan?

You can apply for a Post Office Personal Loan online. It only takes a few minutes providing you have the following details ready before you start your application:

  • Home address for the last three years
  • Employment details
  • Income and outgoings
  • Bank/building society account details – the account must have a direct debit facility


If you find you need help at any point, just call the Customer Service Team on 0800 169 2000.

What happens after I apply?

As noted above, Post Office aims to give an instant decision on all loan applications. If your application is successful, your loan agreement will be sent in the post. You’ll need to check the details and then sign and return it to confirm you agree with the terms and want to go ahead with the funds transfer.

Remember that signing your loan agreement means you’re committing to meeting monthly loan repayments. If you don’t keep up with repayments, you’ll incur late payment fees. What’s more, missed payments appear on your credit history and can impact your credit score.

The first loan repayment will come out of your bank account one calendar month after the funds are transferred to you.

There is a 14-day cooling-off period, which you can use to return the loan should you change your mind.

Check if you're eligible for our personal loans without affecting your credit score

Small print

Post Office ® credit cards, personal loans and overdrafts are provided exclusively by Bank of Ireland (UK) plc.

Post Office Limited is a credit broker and not a lender. Post Office Limited is an appointed representative of Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Post Office Limited is registered in England and Wales. Registered Number 2154540. Registered Office: Finsbury Dials, 20 Finsbury Street, London, EC2Y 9AQ. Post Office and the Post Office logo are registered trademarks of Post Office Limited. Our FCA Register number is 409080. You can confirm our registration on the FCA's website ( in new window).