Personal Loans

How to get the best personal loan 

With David Lennon, Founder of ‘You’re Welcome Finance, also known as the ‘Personal Loan Guy 


The market is full of banks, credit unions, pay day lenders and others, all offering hundreds, if not thousands, of personal loan products. It’s no wonder people get confused and overwhelmed and end up with a product that does not quite fit. 

This also probably explains why the number of complaints received by the Financial Ombudsman Service in 2016/2017 was up by 11 percent on the previous year with teenagers as young as 18 being lent large sums of money. Most of the complaints were about personal loans provided by banks. 

I strongly believe personal loans are the best way to consolidate debt and borrow money for life experiences and purchases. Credit cards can be a trap. Many people can’t stop spending if there is available credit which means if you lack self-control, a credit card is the worst thing you can get. 

When looking around for a personal loan, there are five key things you should look at. This is where a good broker comes in. They will help you to find the best loan. Here are the five things: 

  1. A good interest rate: Make sure you are getting the best interest rate for your personal loan. Rates range in the market and a small difference in rate can add up over time 
  1. Set up fees and charges: Some lenders charge administration fees for loan setup. This needs to be factored into your consideration. 
  1. Early repayment penalties: Some lenders may penalise you financially for paying your loan off early. Paying your loan off ahead of time means lenders miss out on receiving the interest that they would have otherwise earned. 
  1. Late payment fees and interest: While it is important that you make your repayments on time all the time, sometimes, things go wrong, and you don’t want to be hit with heavy charges as a result. Also, setting up a direct debit to make your payment is the safest method of payment. 
  1. Find a good broker: Work with them to clarify your requirements so you secure the best personal loan product for your needs. Every time you apply for a loan, the lender will undertake a credit check, known as a hard inquiry, which can lower your credit score by a few points. A broker will be able to assist you to secure the best product without the need for multiple applications. This is by far the best way to go about sourcing a loan product. 

While the Royal Commission has uncovered concerning behaviour in the finance sector, it has also helped to clarify that brokers disclose their payments and commissions to clients unlike bankemployed lending officers who are not required to disclose what type of bonuses or financial benefits they receive for writing business for their employer. 

I hope this level of transparency provided by brokers is restoring people’s confidence in the financial system. 

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