Recently, personal loan rates have hit their lowest point in history with Sainsbury’s now offering their medium-term finance at just 2.8%. This has made them a popular choice amongst consumers looking for fixed repayment terms to help with budgeting for a large expense.

Personal loans can be used for almost any viable (non commercial related) purpose which is another reason for their popularity. With that said, not all consumers use them for the right reasons and can find themselves in financial trouble if they haven’t given serious thought to the financial implications.

Here at Talk Loans we’ve come up with 3 popular and sensible uses for personal loans:

Debt Consolidation

As we mentioned in a previous post, the average interest rates on credit cards is around 17%, which is significantly higher than most personal loans. This means if you’ve got multiple credit cards all with high balances on them, you’ll be getting charged large amounts each month on interest payments alone.

This is where personal loans are particularly helpful, they allow you to pay off the outstanding balance on credit cards and organise them into manageable and affordable monthly repayments. This makes budgeting extremely simple and will even save you cash in the long run.

Upgrading Household Appliances

If your household appliances are getting old and starting to go wrong, you might find it’s cheaper to upgrade them to newer models. Maintenance costs on old appliances can be expensive as replacement parts are often tougher to get hold of. Not only that, but older appliances are typically less economical which means the running costs are probably higher than they should be. New models will usually come with a comprehensive warranty period so if anything does go wrong you won’t have to worry about the repair costs.

In this situation, using personal loans to cover the cost of household appliances is a sensible thing to do as it can save you cash in the long-run.

A Car

Much like upgrading your household appliances, using a personal loan to cover the cost of a new car can be a sensible idea. As your car gets older, the risk of things going wrong increases. In fact, most car parts have a shelf-life (in terms of mileage) and once you’ve gone beyond this point it’s a good idea to get them replaced which can often be extremely expensive. For example, a cambelt replacement is likely to set you back between £125 and £250 depending on the model of your car.

There are now numerous financial benefits to owning a new (or newer) car. Car manufacturers are now encouraged to make their cars as economical as possible meaning most new diesel models will now achieve 60+MPG on a normal run. Increased fuel economy also means cheap tax, many new models will cost just £30 per year to tax and some may even be tax exempt. New cars are also free from MOTs for their first 3 years after registration and come with an extended warranty.

Once again, using personal loans to cover the cost of a new car is a sensible option. Personal loans can also be cheaper than specialised car finance so don’t be afraid to shop around to get the best rates.


If you’re considering applying for a personal loan, it’s important to question whether you’ll see any long-term financial benefits as a result of taking out the loan. Choosing to taking out a loan is a serious commitment and not something that should be rushed into. Prior to applying, take plenty of time to calculate how much you need to take out. Applying for more than you need will just mean that you’re paying more back in the long run and applying for too little may leave you in a situation where further finance is required in the future.

If you’d like to discuss personal loans or guarantor loans with us, simply call 01603 391104 or email us on