Assuming you've taken out a repayment loan' which will usually be the case, some of the money you repay will go towards servicing the loan and the rest of your payment will be used to pay off capital and reduce the outstanding debt. If you're looking to borrow money over between one and five years, a personal loan could be right for you. To decide on what sort of credit is appropriate to your circumstances, you should consider a number of factors. A personal loan can be the best bet if you have a number of debts which you wish to consolidate into one loan. In doing so, you ought to be able to simplify your affairs and often reduce the overall cost of credit.
Different lenders have different preferences when deciding which borrowers to take on.
As a borrower when you're considering one deal with another, make sure you're comparing like with like. This can be a helpful starting point in determining the real interest rate you'll face over the term of the loan but treat the figure with care. For example, does the APR include things like credit insurance on one loan but not on another. Interest rates vary. And, it's worth bearing in mind that some lenders are only interested in lending to people whom they regard as a 'safe risk'.