Are you unsure of what features you should be looking for in a loan?

Look over our guide to the various loan features, then search and compare with confidence in what you want from your loan.

A personal loan can be either secured or unsecured.
A secured loan is commonly known as a Homeowner loan.

Please note you are only able to compare unsecured personal loans with Tesco Compare

With an unsecured personal loan you don’t need to use an asset, such as your home or car, as security.

There are two main types of unsecured personal loans you can choose from:

• Fixed rate loans
• Variable rate loans

Fixed rate loan

With a Fixed rate loan you pay a set amount every month, which means you can budget your monthly spending without worrying about changes in the interest rate affecting your loan payments.

Variable rate loan

If you take out a Variable rate loan the interest you pay from month to month can change, depending on the Bank of England base rate and various changes in the financial market. Although there’s a chance you could save money if the interest went down, if it goes up you could end up paying far more interest on the loan than you first expected.

Although your home or car can’t be taken away as a result of missing payments on your personal loan, it doesn’t mean you can skip payments without consequences. Your credit rating may be negatively affected, and you could receive a County Court Judgement (CCJ) against you and some lenders may have a policy of passing your details onto debt collection agencies.

Homeowner loans are typically available for loan values of £5,000 or more. Because the loan value is often higher, a homeowner Loan is secured against your property. Your property will therefore be at risk if you cannot keep up with repayments. This is the main difference to taking out an unsecured personal loan.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. SECURITY MAY BE REQUIRED FOR HOMEOWNER LOANS. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Security is required for homeowner loans.

• One of the first features you should look to compare when searching for your loan is the Annual Percentage Rate, or APR. This will give you an indication of how much interest you will be paying on your loan – so the lower the APR, the less it costs you to borrow money.
• Another feature to look out for and compare is the loan arrangement fee. Not all lenders add this charge, and even though loans with these fees will have a lower interest rate it’s worth searching for a loan with a low rate and no fee.
• Some lenders will also charge you an early repayment fee, so if there’s any chance you may wish to pay off your debt early make sure there is no such fee on your loan. You can save a great deal of money by paying back your loan early, so try to leave this option open!
• Payment protection insurance or PPI is often sold alongside loans, and could help cover your loans payments if you were no longer able to work because of involuntary unemployment, accident or illness. The payment period is usually limited – typically for 12 months. You don’t have to take out this kind of insurance with a personal loan, but if you decide it is the safest route don’t just take the PPI offered with your loan – these can be expensive and it could pay off to look for better rates.
• Payment holidays or payment breaks in a loan mean that you could choose to skip a loan payment without penalty. Although this can be a benefit if you experience a tough month, don’t forget that lender will still be charging you interest for the extra time it takes to pay off the loan.