How to Compare Personal Loans in Ireland Without the Stress

How to Compare Personal Loans in Ireland Without the Stress

Personal loans are unsecured loans that could be used to cover a wide range of expenses. Since these loans are expensive, experts suggest comparing their interest rates before jumping to an offer. Comparison helps you obtain the most affordable deal.  

What are personal loans? 

Personal loans enable you to borrow a lump sum of money that you pay down over an extended period of time. These loans can be used to cover planned as well as unexpected expenses. Personal loans generally start from €5,000. The maximum amount can be up to €20,000 to €25,000, depending on your needs and repayment capacity. Personal loans are available from banks, direct lenders and credit unions.  

Small emergency loans are also referred to as personal loans, as they do not require collateral, but they are categorised as short-term high-cost debts. They cannot enable you to borrow more than €1,000 and require you to settle the debt in one fell swoop.  

When it comes to taking out a personal loan, a lender will carefully run an affordability check. Interest rates and repayment schedules will be offered based on your income, credit score, and repayment capacity.  

Ways to compare personal loans in Ireland 

Use the following steps to compare personal loans in Ireland: 

Know your loan purpose 

Before starting comparison, you should know why you need money. Lenders often tailor rates to the purpose of your loan. For instance, car loans will come with lower interest rates than standard personal loans, because your lender has the right to repossess your car in case you make a default.  

Similarly, if you apply for a personal loan to consolidate your debts, you will most likely qualify for lower interest rates as compared to the interest rates of short-term debts. By defining your purpose, you will know which products are most relevant to you.  

Compare interest rates 

When comparing interest rates, lenders usually look at interest rates, but this is not the correct way of determining the total cost of the debt. You should look at the APR (Annual Percentage Rate), which includes interest rates and fees. An APR determines the true cost of the borrowing. Make sure that you compare loan deals based on the APR.  

Some lenders reveal only flat rates. They never reveal the true cost of the borrowing. The representative APR, in fact, is the lowest possible rate you can qualify for. It is highly unlikely that you meet the criteria to get those rates approved. If you see flat rates such as 7% on any comparison website, expect the APR to be as close to 14% or 15%.  

Look at loan terms 

A loan term is another factor that you need to take into account while comparing personal loan offers. If you manage to qualify for a shorter repayment period, monthly payments will certainly be higher, but overall interest will be less, as compared to loans with longer repayment plans.  

Of course, you will choose a repayment term that does not put strain on your finances, but you would not want to choose a longer repayment plan unnecessarily.  

Check fees and hidden costs 

On the borrowed sum, not only you pay interest but also fees and associated charges. Lenders may charge various types of fees such as arrangement fees, early repayment penalties and late payment charges.  

It is hard to know the exact bifurcation of fees before formally applying for a loan, but you can get an idea about it by doing some research. Fees vary by lender. Credit unions are generally known for charging lower fees than direct lenders.  

Use online loan calculators 

Various online loan calculators simplify the process. If you know the loan amount, interest rates and repayment terms, you can know the estimated cost of borrowing.  

As you cannot know the actual interest rates, you will need to use the representative APRs. Use comparison websites as they show the range of interest rates offered by different lenders.  

Compare beyond the interest rate 

Comparison does not have to be based on interest rates and repayment terms. Though they are important factors to consider, they are not the be-all and end-all. You should also make comparisons based on the following factors: 

• Customer service – you should check whether the lender is responsive to customers’ queries. Check reviews on Trustpilot.  

• Application process – some lenders approve applications faster than others. Speed is an important factor if you need money urgently.  

• Reputation – check the reputation of a lender. Credit unions are more reputable than direct lenders.  

The bottom line 

Whether you are looking for quick and fast approval loans or personal loans, you should always compare deals before formally submitting your application. There are various comparison websites to help you know the representative APRs.  

Apply for these loans with the help of a broker if you want to be introduced to a lender whose criteria match your needs and financial condition.  

FAQs 

What documents do I need to apply for a personal loan in Ireland? 

To apply for a personal loan in Ireland, lenders will require 

• Proof of identity such as your driver’s licence) 

• Proof of address (such as a utility bill) 

• Proof of income (recent payslips or tax documents) 

• Bank statements 

Do credit unions offer lower interest rates? 

Credit unions are known to provide lower interest rates than banks and direct lenders, but it is not guaranteed. They might not offer as large loans as online lenders and banks.  

Are online lenders in Ireland safe to use? 

Online lenders in Ireland are safe to use provided the Central Bank of Ireland regulates them. Before borrowing money, you should always verify whether the lender is authorised. 

How can a broker help with choosing a lender? 

A broker will evaluate your application. Based on soft searches, they will pick a lender whose acceptance criteria you easily meet. Then, the lender will run hard checks to determine your repayment capacity. Based on this, they will offer interest rates and repayment terms.