Flexible loans – could they work for you? - Loans - News - Moneyfacts


Flexible loans – could they work for you?

Flexible loans – could they work for you?

Category: Loans

Updated: 12/02/2014
First Published: 12/02/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Personal loans are notoriously rigid in terms of their repayment schedules. Once locked into the deal you're tied to set monthly payments, with any early repayments usually subject to hefty penalties – often a month or two of interest – which could easily minimise the benefits of paying early.

However, this could be set to change with the introduction of flexible loans, where a few key lenders are offering borrowers the chance to make early repayments whenever it suits them – without being lumbered with extra charges.

Lloyds and Halifax are two lenders currently offering flexible loans, available to those looking to borrow between £7,500 and £25,000, but only current banking customers will be eligible. However, this level of flexibility comes at a price – the headline APR is a lot higher than with standard loans (up to 7.4% APR), which will result in higher monthly repayments and potentially higher overall costs if the loan isn't paid off any earlier.

So, will a flexible loan be right for you?

The key, as with any type of borrowing, is to be realistic. Make sure you're confident you can afford to make at least the minimum payments and, if you think you'll have the facility to pay off more at some point, a flexible option could be worth considering.

If not, then the traditional (albeit highly rigid) format might be the better solution, thereby reducing the risk that you'll end up paying extra in the long run.

What Next?

Compare loan repayments and interest with our easy-to-use loan calculator

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Regulator to take closer look at high-cost credit

When used well, credit can be a viable way to help make ends meet and balance the books – but the problem comes when that credit is of the high-cost variety. The regulator has will be taking a closer look at the sector to see what else can be done.

The payday loan market is still broken

The payday loan market has been under fire a lot in recent years, and as a result, the financial regulator stepped in. But has it made a difference? Unfortunately, it looks as though there’s still a lot of work to be done.

Get a record low rate loan - if you qualify

Competition in the personal loans market is as hot as ever, so much so that one loan provider has slashed rates to the lowest on record – but only to those who fit the bill. The shopping bill, that is…