Direct Line Personal Loan
The best thing about the Direct Line Personal Loan is the great rate at the bottom end of the market; although there's no payment holiday so you start paying back immediately. Definitely one to consider for debt consolidation or big expenses.
Direct Line Personal Loan examples (correct at publication date, uninsured):
| |
Monthly Repayment |
APR |
| £3000 across 2 years |
£133.92 |
6.9% |
| £5000 across 5 years |
£98.20 |
6.9% |
| £10000 across 7 years |
N/A |
N/A |
|
Direct Line only has one loan product- so even with an excellent interest rate, it's not right for all occasions. The maximum repayment period is five years, so if you want to borrow lots of money, you might prefer to reduce your payments by borrowing from other companies which can offer you a seven year term. The rate is good anyway, but particularly for lower-end borrowers: in the £2000-£5000 range you could pay less than half the interest you'll be offered by your bank. If you get lucky and want to pay the loan off early, you'll also only be charged one month's interest.
Unlike some other lenders, the minimum amount you can borrow is £2000 (although if you want less than that, an overdraft arrangement is often cheaper anyway). This is the sort of loan to take out if you have nasty one-off expenses like a plumbing disaster which upset your usual cashflow, and you should aim to compare the Direct Line Personal Loan (where interest rates are around 6.9%) with, say, a bank overdraft or a credit card.
Some credit cards (the obvious way to pay the plumber…) charge up to 4 times as much as this, although some others have very low rates and will also offer you a payment holiday. The Direct Line Personal Loan has no holiday- you start paying right away, but if you'd like the discipline of getting the money paid back, then maybe that's right for you.
As we said earlier, the Direct Line Personal Loan performs best between £2000 and £5000; so it's ideal for middling expenses like home decorating or perhaps wedding expenses. For debt consolidation, you may want to plump for a product with a payment holiday, or indeed the classic move of applying for a credit card with an interest-free period.