Needing a little extra cash in a pinch is something most people go through at some point. While borrowing from friends and family might be your first choice, if you need as much as £1,500, you might struggle.
Fortunately, there are options available to you, with numerous lenders happy to step in. Before throwing caution to the wind and taking out a loan, however, it’s important to understand a few things. That’s where we come in, with our handy guide to borrowing £1,500.
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What can you spend a £1,500 loan on?
It’s really up to you. Assuming that it’s personal, rather than a business loan, what you do with the money is no one else's concern.
That being said, it’s important to make sure you're getting it for the right reasons. While £1,500 might sound like a lot, in loan terms, it’s fairly small when it comes to loans. This means that they often come with relatively high-interest rates, and unless you can repay it sharpish, it can be quite expensive. These interest rates will only tend to get higher the smaller amounts you take out, so it will cost you relatively more (not absolutely!) to take out a £500 loan or £1,000 loan.
That’s why it’s important to first make sure you can return it within the agreed term, and secondly, that it’s for a worthy cause. As you might have imagined, this excludes lavish holidays.
How much will a £1,500 loan cost?
The total amount you pay back on a £1,500 loan will depend on a number of factors:
The interest you pay on a loan will normally be illustrated as APR or annual percentage rate. So, that’s how much extra you would pay should you take 12 months to repay it.
It’s advisable to return it as quickly as possible, although many companies have minimum repayment terms. This means that you won’t be able to repay before say three months, and if you wanted to, you might incur early repayment fees. As well as paying a larger overall figure, longer loans sometimes carry higher APRs too.
13.5% is the standard interest rate for a £1,500 loan. So, if you borrowed £1,500 for six months, you would only pay back £1,559. But if you borrowed it for 12 months, you would pay back £1,611. That’s based on 13.5%, and as we said, longer loans can carry higher APR rates.
If you need your money in an emergency and go for a payday loan, you are likely to pay much higher interest rates.
Something else that will affect your APR is your credit rating. If you have a particularly poor one, you will most likely need to pay back a higher amount, as the lender will view you as a more risky investment.
If you miss a payment, then you might incur late fees. Exactly what they are will vary, and they can come in the form of a flat rate or percentage of the loan. While simply sticking to the agreed terms is often easier said than done, it’s important to understand what these late fees could be.
Some lenders will charge you money just for borrowing money from them. It’s not a standard, however, so you can usually find lenders that don’t require you to pay them.
What types of £1,500 loans are available?
When it comes to borrowing £1,500, there are a few different types of loan that you can choose from. The most common ones are:
Payday loans: Payday loans are generally the easiest to get and can be in your account within a few minutes. However, this convenience comes at a cost, and they generally have the highest rates of interest. They are generally short term, designed to be paid back in one go, and within a few months, although this does vary.
Guarantor loans: If you fail a credit test but need the money, you can turn to a guarantor loan. This requires you to find another party who is willing to step in and cover should you miss a payment. While you will still receive the money and pay it back, it will be in essence under their name. It’s important to note that even though a guarantor loan might give you a better APR than you could achieve yourself, they have relatively high rates in general.
Personal loans: A personal loan is generally paid in instalments over several months or years. They are one of the most common types of loan you can get and assuming you have fair credit history, offer reasonable interest rates.
Can I get a £1,500 loan without a credit check?
Generally speaking, no. Lenders are, by law, required to carry out their due diligence on prospective borrowers. However, some will be more thorough than others.
This means that with certain companies, even if your credit rating isn’t great, you will be able to borrow as long as you can demonstrate you have the means to pay it back. However, this will likely cause you to pay a higher interest rate overall.
How do I apply for a £1,500 loan?
Once you have decided what type of loan you want, and how long you want to pay it back in, you need to make sure you have the following:
Your monthly salary
Your expenses, e.g rent, childcare, bills
What address do you live at now, and is your address history
Bank account details
Date of birth
Now, all you need to do is check out our loan comparison tool to see what deals are available to you on the market right now.
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Author: Michael Quinn
Michael is a dedicated author helping usave to write guides, blogs and news for the last four years. When not writing articles, you can usually find him at wine tasting events or having a political debate on the night tube.