Considering taking out a loan to fund a dream you’ve had can be an exciting time. Maybe now’s the time to go on that holiday you’ve been thinking about for ages, or perhaps a new kitchen is on the cards.

However, you may have some trepidation about securing a personal loan. You’ll probably have lots of questions which you want to clear up before you apply.

We’ve answered some of the most common questions asked by borrowers to help you on your lending journey, making the process clearer and easier.

Can personal loans be used for anything?

There’s very little that a personal loan can’t be used for. We see most people across the Channel Islands ask for support with larger purchases, like home improvements, university funding, cosmetic fees, and vehicle finance.

But it doesn’t have to be a sizeable loan if that’s not what you need. It’ll depend on the thresholds of borrowing that your lender allows. At Close Finance, we start loans from £1,000 all the way through to more than £500,000.

However, there are some restrictions on what you can’t use personal loans for. This includes illegal activity, speculative payments like gambling, or as a deposit to buy a house.

An extensive list of what is and isn’t accepted should be available from your lender.

Can personal loans be paid off early?

Yes, any loans you have can be paid off in full before the agreed maturity date. But, before you make the decision to do so, make sure you check the terms and conditions of your contract.

Some lenders will apply an early repayment charge (ERC) for any borrower paying off their loan ahead of time. This will be detailed in the loan agreement.

Of course, if you’re happy to pay the additional charge, repaying your loan early means paying less interest overall and being debt free earlier. If you’re unsure about what to do, talk through your options with your lender.

Can personal loans be in joint names?

Most lenders will allow loans to be set up in joint names. But, before you decide to sign on the dotted line, make sure you know and trust the other person.

When you apply for this type of loan, not only will your credit score be considered, but so will the other person’s. If one of you has a poor credit score, the loan application may be declined.

Also, be aware that if you were to fall out and the relationship were to end, you are both still jointly liable to pay off the debt. If one person stops paying altogether, the other person will need to pay off the loan regardless.

Additionally, even if you remain in a solid partnership or friendship, do you have contingency plans in place if one person became unable to make repayments?

There’s a lot to think about when setting up a joint loan, so make sure you’ve got every angle covered before you go ahead.

Will a personal loan affect my credit score?

A personal loan can affect your credit score both positively and negatively, it depends on how you use it.

If you take out a personal loan and consistently keep up with repayments, this can have a positive effect on your credit score. Your borrowing history will improve which reflects well if you need to take out any sort of future loan or credit card.

However, if you have a personal loan and struggle to keep up with repayments, this can have an adverse effect on your credit score. If you find yourself unable to make monthly payments, make sure to talk to your lender as soon as possible. They will be able to try and work out a way to help you get back on track and signpost you to external resources of support.

Are personal loans unsecured?

While your lender may seek some form of security for personal loans, particularly if the amount requested is significant, most personal loans are unsecured. This means the money you borrow isn’t tied to anything, like a car or a house. Because of this, people applying for an unsecured loan might expect to see higher rates of interest compared to a secured loan.

Over how long can a personal loan be repaid?

The term over which a personal loan is repaid will be agreed with your lender, but this is usually between one and five years, by way of monthly instalments. You can choose however, to repay the loan early should you wish.

At Close Finance, we offer personal loans for a broad spectrum of needs. From home improvements to holidays, university tuition loans and cosmetic fees, we’ll help make your dreams become a reality.

The process, while done with great care and diligence, is usually done quickly and efficiently by our expert team. Begin your application by:

From here, our friendly team will walk you through your options, explain any documentation required, review your application and work towards securing you your desired loan amount. As a responsible Channel Islands lender, we’ll ensure you’re not borrowing above your means at time of application.

If you’re planning to take out a personal loan, we hope we’ve cleared up some of the questions you may have. But, if you’ve got a few more that need answering, pop into our Jersey or Guernsey branch today. We’d be happy to help.


Finance is available to Channel Islands residents of 18 or over and is subject to status. Indemnities may be required. Terms and conditions apply. Close Finance is a registered business name of Close Finance (CI) Limited, which is a part of the Close Brothers Group under Close Brothers Group PLC. Subscriber to the Code of Practice for Consumer Lending in Jersey – sponsored by the Jersey Consumer Council. Licensed in Guernsey with the Guernsey Financial Services Commission pursuant to part II of the Lending, Credit and Finance (Bailiwick of Guernsey) Law 2022. Where relevant, the dealer or broker is acting as an intermediary and not a lender. If you enter into a credit agreement, Close Finance will typically make a payment to the dealer or broker for arranging the finance for you. This payment will not impact the amount you pay, the cost of goods, or the monthly payments, and shall be disclosed to you upon request prior to entering into any agreement. This advertisement is approved solely by Close Finance and is not approved by any regulator.