Personal loans are a very common arrangement that we all need to use form time to time, but before doing so we should be aware of their advantages and disadvantages.

There are a number of great advantages with these types of loans. Firstly, assuming your credit rating is good, they are fast and easy to arrange. Secondly, most banks offer them over a wide range of values (maybe £500 to £15k), with vairying terms (maybe 6 months to 10 years). Third, as competition increases in the UK, the interest rates are getting better.

However, you will need to shop around as typical APRs vairy from 10% to 25% - normally, the rates are more competitive on larger loans. Unsecured loans are cheaper than secured, but of course you risk losing your security if you fail to meet your repayments.

These rates are normally competitive when compared to the usual list of alternatives offered for purchasing the type of items they are used for e.g. cars, with the normal alternative being hire purchase or lease.

One final advantage of personal loans is that you can secure a single loan for a number of purposes, say a holiday and a new suit. This can save time and effort (both in arrangement and management).

On the downside, personal loans (particulary unsecured, but also secured) are not as competitive way of raising cash as mortgage, capital raise or equity release.