Your complete guide to loans in Ireland
A loan can give you a financial helping hand, but borrowing can be costly. Here’s all you need to know about loans in Ireland and how to get the best rates.
What’s in this guide?
Part 1
How loans work in Ireland
What is a loan?
It’s money you borrow over a fixed period and pay back with interest.
Although less flexible than a credit card or overdraft, a loan provides more clarity over total cost and makes budgeting easier.
What can you use a loan for?
You can use your loan for almost any purpose, some popular reasons for getting one include:
Some lenders may state that their loans cannot be used for gambling, investment or business purposes.
How do loans work?
If approved for a loan, you’ll get it paid into your bank account and repay it in fixed monthly instalments over an agreed period of time called a term.
A personal loan term can be up to 10 years, but a typical loan term is between three and five years. Secured loans can be repaid over a period of up to 30 years.
Banks, building societies and credit unions charge for lending money, meaning you pay more back than you borrow. This charge is called interest.
The interest you pay is calculated on the amount of money you borrow and the term of your loan.
There may also be extra fees to cover administration costs and late or missed payments.
How much does a loan cost?
The lower the interest rate, the cheaper your loan monthly repayments will be. The longer you borrow, the more your loan will cost overall.
You can check the cost of your loan with our simple loans calculator and compare lenders.
The total cost of borrowing depends on:
- How much you want to borrow
- The time you need to repay the loan
- The interest rate set by the lender
Find the cost of your loan with our simple loans calculator and compare lenders.
How lenders set your interest rate
Your interest rate may differ from the advertised rate because it’s based on your credit history and ability to repay the loan.
Lenders use your credit history to determine how much risk they are taking by lending you money, so the interest rate you’re offered will depend on your credit rating and repayment capacity.
If you have missed or made late payments on a loan, credit card or mobile phone bills in the past, it may negatively impact your credit rating.
- Low credit score: If you have a bad credit history or no credit history at all, you are considered high risk and the interest rate offered will be higher, which means you’ll pay more for your loan.
- High credit score: If you have a good credit score because you have been a reliable borrower and haven’t defaulted on payments you will get a lower interest rate on your loan. This will make your loan cheaper.
- Financial status: Lenders also assess your income and employment status to assess repayment capacity. If you have a regular, good income, the interest rate will be lower than if you have a sporadic or low income.
Find out how your credit rating works and what you can do to improve your credit score.
Part 2
Types of loans in Ireland
A loan is a big commitment, so it’s helpful to know your options and which type of loan suits your needs best. There are two ways of borrowing money as a loan:
What is an unsecured loan?
It’s a type of credit where you borrow a fixed amount and pay it back with interest over an agreed period. Because it’s an unsecured form of borrowing, you don’t have to provide an asset, such as your house, or savings, as security.
Unsecured loans in Ireland are available up to €75,000 with terms lasting up to 10 years, although this type of loan is usually for smaller amounts over a shorter term.
The monthly repayment and interest rate are fixed at the start of the loan.
What is a secured loan?
It’s money borrowed against an asset, such as your home or a property with equity. It can also refer to a type of loan closely associated with Credit Unions, which allows members to pledge their savings to get a reduced loan rate.
Secured loans can be taken out for larger sums of money and borrowing over a longer period. Interest rates can be fixed, variable or a combination of both. It’s possible to borrow up to €250,000 with a secured loan, subject to your equity and terms and conditions.
If you have equity in your home, it may be easier to get approval for a secured loan; however, your home is at risk if you fail to make repayments.
Types of unsecured loan
These loans all have a fixed-term repayment period and monthly payments based on a set rate of interest.
- Personal loan money you can use for almost any purpose, typically between €1,000 and €25,000.
- Home improvement loan for work on your home, such as building an extension or fitting a kitchen.
- Car loan to finance a car purchase as an alternative to hire purchase or a personal contract plan (PCP).
- Debt consolidation loans a facility to pay off all existing debts with one loan so repayment is simpler.
- Guarantor loan for people with poor credit history. A guarantor pledges to make your payments if you default.
- Credit Union loan low-cost borrowing for credit union members based in the community or workplace.
- Social welfare loans the ‘It makes sense loan’ is for those in receipt of social welfare, available at participating credit unions.
- Moneylender loan a short term, high-interest loan from a regulated lender other than a bank or credit union.
- Green loans money you can borrow to help improve your home’s energy efficiency.
- Student loans helps students pay for college and associated fees such as tuition, books and living expenses.
Find the best personal loans and compare interest rates.
Part 3
Where to get a loan in Ireland
You can get a loan from a bank or building society. You can also apply for a loan online with other money lenders, but always check they are regulated by the Central Bank of Ireland.
If you are a member of a credit union, you can apply for a loan with your local union, even if you are a low earner or getting social welfare payments.
We compare Ireland’s six main lenders on our loans comparison page.
- AIB
- An Post Money
- Avant Money
- Bank of Ireland
- PTSB
- Revolut
What’s different about a credit union loan?
Credit unions offer some of the lowest interest rates in Ireland, but you’ll need to check what’s available at your local branch.
They’re also known for supporting their members, and will review each individual loan application thoroughly to give you the best chance of approval.
Before applying for a credit union loan, you’ll need to;
- Share a common bond with a credit union. This bond can be a shared locality, workplace or club.
- Become a member of a credit union first, but you can usually apply for membership and your loan in the same day.
Compare personal and home improvement loans from Ireland’s best lenders.
Part 4
How to choose the right loan
A loan is worth considering if you are confident you have the financial means to pay it back, but choosing the right loan from a lender you can trust is important.
Shop around for the lowest cost loan that fits your financial needs and check you meet the lending criteria before you apply.
Consider these things before taking out a loan
Personal loans
A personal loan is a quick and simple way to borrow money and spread the cost. Compare lenders to find the best low rate loan for you.
Home improvement loans
Renovate, repair or refurbish your property with a home improvement loan. Compare home improvement & green loan rates for the best deal.
Car finance
Car finance is a good way to purchase a new vehicle without breaking the bank. Find out the best options to pay for your new car.
Can students get loans?
Yes, most banks and credit unions offer low cost loans to students.
Students can borrow between €600 and €50,000 but may need a parent or guardian to guarantee the loan. The payment term is normally between one and five years.
Students can also apply for a Student Contribution Loan, which is funding to help with the cost of the Student Contribution Fee.
If you decide to go ahead and take out a loan, make sure you are borrowing from an authorised lender. The Central Bank of Ireland regulates the industry and protects you from bogus lenders.
You can check if a lender is authorised on the Central Bank’s register.
The Home Energy Upgrade Loan Scheme
The Home Energy Upgrade Loan Scheme aims to make home energy upgrades more affordable for eligible homeowners. It will allow homeowners to borrow between €5,000 and €75,000 at very low interest rates to make energy upgrades to their home.
The scheme supports energy efficiency and renewable energy upgrades, where the Sustainable Energy Authority of Ireland (SEAI) is also grant-aiding those works.
The scheme is established and offered by the Strategic Banking Corporation of Ireland (SBCI) and will be on an unsecured basis for a term of up to 10 years.
Part 5
How to apply for a loan
Once you’ve calculated how much you can borrow and compared lenders to find the best loan rates, you may be ready to apply for your loan.
Applying for a loan online is usually the cheapest and quickest way to get a loan.
The lender may check your eligibility before you make a full application so no mark is made on your credit record. You’ll simply need to provide a few personal and financial details for an eligibility checker.
In return, you’ll get an instant approval or rejection and an idea about how much you could borrow.
Check you qualify for a loan
To be eligible for a loan in Ireland, you need to:
- Be over 18 years of age
- Be a resident of the Republic of Ireland
- Provide proof of your address
- Provide proof of your income
- Pass a credit check to the lender’s requirement
How long does it take to get a loan?
If you apply online, straightforward, unsecured loans can be approved on the day of application and the money may be transferred into your bank the same day.
This is subject to several conditions, such as applying on a weekday between 9 am and 5 pm and having a good credit rating. Some lenders will charge a fee for same-day transfer of funds.
Secured loans and loans for restructuring debt, high value, or bad credit loans will take longer. Most lenders will indicate the length of time it takes to approve and process their loans on their website.
Can you apply for a loan with bad credit?
Yes, you can, but you will likely pay higher interest and the loan will be more expensive.
You may find that banks are more reluctant to lend to people with bad credit, but there are many specialist lenders who may be able to help.
A good first step to getting a loan with bad credit is to check your credit score and work on repairing it so you can get better credit facilities in future.
It can be helpful to use a broker to find the best loan for bad credit so that individual credit checks don’t harm your score further.
Part 6
Your loan calculator
Using a loan calculator
If you want a more accurate idea of how much a personal or home improvement loan will cost you, use our quick loan calculator to find how much the loan will cost with each lender.
Our loan comparison tool can help you weigh up costs and choose a lender. We show the typical APR (Annual Percentage Rate) so the interest rate you’re ultimately offered by the lender may differ.
Here’s a quick guide to the features you’ll need to compare:
| Feature | Meaning | |
|---|---|---|
| Typical APR (Annual Percentage Rate) | The interest rate given to the majority of customers, including lender fees and charges | |
| Interest rate | The headline rate of interest not including fees & charges | |
| Total repayment | The overall cost of the loan at the end of the repayment period | |
| Monthly repayment | The amount you’ll repay each month |
How much can you borrow?
The amount you can borrow depends on two things:
- The type of loan you take out
- Your loan repayment capacity and financial status
It’s possible to borrow up to €250,000 with a secured loan, subject to your equity and terms and conditions.
The maximum you can borrow with an unsecured loan is €75,000, but people usually take out a personal loan for smaller amounts.
Loans FAQs
What does APR mean?
APR is short for Annual Percentage Rate. It’s a calculation of the overall cost of your loan and takes into account all the costs during the term of the loan including set up charges and the interest rate. Any extra fees are added to the loan amount before interest is calculated.
It’s a legal requirement for credit lenders to show their interest rate on borrowing so an easy and fair comparison of interest rates can be made between finance companies like banks and lenders.
What is a broker?
A broker acts as a link between yourself and the lender. They will provide financial advice and use a panel of lenders to find the best loans available based on your circumstances.
What is the easiest loan to get approved for?
If you have a good credit rating and can demonstrate repayment capacity, your chances of approval are greater for most loans.
However, if you have a poor credit rating or a low, irregular income you will find it harder to get approval from mainstream lenders.
If this is the case, the easiest way to get a loan is to find a broker specialising in bad credit loans and they will advise you of the best options available.
If you are a member of a credit union and on social welfare, they may be able to help you get an ‘It Makes Sense’ loan of up to €2,000.
Compare loans today
It only takes a few minutes to find the best loan for your borrowing needs.