Borrow a fixed sum and pay it back with interest, over a fixed length of time
Personal Loans Overview
Personal Loans tailored to new graduates’ needs:
Professional and Career Development Loans (PCDLs)
Graduate Loans
Some banks and lenders offer preferential loan packages for recent graduates.
What are they for?
- Clear your overdraft once it stops being interest free.
- Pay for rent deposit, car purchase, work clothes etc.
- Finance setting up your own business or funding further studies.
Useful info
- Preferential interest rates, to help you get sorted.
- Typically available for the first few years following graduation.
- Most banks require you to hold a current account with them before they will lend you money.
Find out more:
Professional and Career Development Loans (PCDLs)
What are they for?
Bank loans to pay for courses or training that will improve your employability or advance/change your career. The course does not necessarily have to lead to a qualification.
Examples:
Post Graduate studies – MSc, MA
Professional qualifications
Management courses
Specialist courses e.g.
homeopathy, catering
Technician level training e.g. plumbing, electrical
Useful info
- Loans available from £300 up to £10,000
- Usually at reduced interest rates. The Government pays the interest while you are studying (and for one month afterwards).
- But you have to start repaying the loan plus interest, one month after you have finished – even if you don’t complete your course, or if you finish earlier than anticipated.
- Early settlement option – you can generally pay extra, or clear the debt early without penalty. But check terms & conditions of your particular loan.
Enquire or apply for a PCDL
Call the National Careers Service for more information, or to find out whether a PCDL is the right option for you:
0800 100 900
Find out more:
Career Development Loans – GOV.UK
Career Development Loans – Money Saving Expert
Professional & Career Development Loans – Co-operative Bank
Manage your Loan
Keep up with repayments
Loans are usually repaid in fixed regular installments, according to an agreed schedule, which makes them predictable and easy to budget.
Budget to allocate funds for monthly repayments, and set up a Standing Order (for a fixed amount) or Direct Debit (if the payments vary), to ensure automatic punctual payments.
How to Set up Direct Debits & Standing Orders – Money Advice Service
Loan Calculator – Money Advice Service
Work out how long it will take to pay off a loan, or how much it will cost you.
Unlike your Student Loan, with commercial loans you must continue repayments regardless of your financial circumstances. Therefore it is not advisable to take out a loan unless you have a guaranteed income to keep up with repayments.
Late/missed repayments can lead to hefty penalty charges and escalating interest, and will also adversely affect your credit rating.
If you are struggling, see Get Help with Financial Problems.
Introductory bonus
If you have taken advantage of an introductory deal such as temporary low interest rates, note when the bonus ends and check whether the interest rate is still competitive. If not, consider switching to a cheaper interest rate option; but always check terms & conditions for lock-in clauses, to ensure you would not incur penalties for switching.
Lock-in clause
If you are thinking of switching, or clearing your debt earlier than the agreed schedule, make sure any penalties don’t outweigh the benefits. Some loans have a lock-in clause, which prohibits the borrower from prepaying before an agreed time; you would be charged a penalty for early settlement.
(The advantage to lenders is they know they will receive a definite minimum amount of interest payments during the lock-in period.)
Early redemption/early repayment charges may be equivalent to about 1-2 months’ interest, which could add a considerable cost to your debt.
Find out more:
Comparison websites are a useful starting point for researching loan products; but always get independent, professional advice before making a decision.
Personal Loans – Money Saving Expert
Compare Loans – Money Supermarket
