Unsecured Personal loans renewal guide: when & how to switch

Switching your unsecured loan the smart UK way

A quick cuppa-sized overview

Look, no one likes overpaying. If your unsecured personal loan feels pricey, it might be time to renew or switch. With average APRs hitting about 16.6% in September 2025 and fewer loan products around, comparing offers before you roll over your deal is essential.

Simple rule: if your rate is high or your credit has improved, check your options.

Who should be thinking about this

If you have an unsecured personal loan in the UK and your costs are creeping up, this is for you. It suits anyone whose credit score has improved, needs to consolidate costly credit cards into one payment, or is close to meeting a lender’s top-up rule - often after repaying roughly 30% of the original balance.

Jargon-free essentials you need to know

Unsecured personal loan - Borrowing without collateral. Faster, but rates can be higher than secured options.

APR - The cost of borrowing each year, including interest and standard fees. Use it to compare deals like-for-like.

Refinance or switch - Clearing your current loan with a new one, ideally at a better rate or over a term that suits your budget.

Top-up - Some lenders let you add to your existing loan once you have repaid a chunk, commonly around 30%. Policies vary, so check your agreement.

Debt consolidation - Rolling multiple debts, like credit cards, into a single loan and payment. Handy before expensive periods like the festive season if the new APR is lower.

Eligibility - Lenders assess your credit record, income, spending, and repayment history on every new application. On-time payments can unlock better terms.

Hard vs soft checks - A soft search does not dent your score. Multiple hard checks in a short spell can.

Early repayment - Some lenders let you repay early without penalty. That can make switching cheaper. Always confirm terms before you act.

Your routes to a better deal

Direct lender or broker - which path suits you

• Direct lenders can feel simpler and sometimes cheaper.
• Brokers can open more doors but read fee and data terms carefully.

When to consider switching or renewing

• Your current APR is higher than today’s best offers.
• You have repaid a significant chunk - often about 30% - and can qualify for a top-up or better terms.
• Your credit score has improved since you first borrowed.
• You want to consolidate debts into one manageable repayment.

Do not lock in a worse rate by rushing. Compare first.

Costs, savings, and the risks to watch

• Rates are rising in 2025 and product counts have dipped, so choice is tighter. That makes shopping around more important and early.
• Savings come from a lower APR, a shorter term, or both. Extending your term can shrink monthly payments but may increase total interest paid.
• Fees to check: broker fees, any early repayment costs, and small-print admin charges. Some lenders allow early repayment with no penalty.
• Multiple hard credit checks in quick succession can dent your score and reduce your approval odds.
• Consolidation helps tidy up your budget, but it only pays if the APR and total cost beat what you already have.

Standout tip: focus on total repayable, not just the monthly figure.

Who qualifies - and what lenders look for

• Repayment history: Consistent on-time payments improve eligibility and pricing.
• Portion repaid: Many lenders want a chunk paid back before renewal or top-up - often around 30%.
• Credit score: If it has improved, you could unlock a lower rate. If it has slipped, prepare for higher APRs or fewer options.
• Income and affordability: Lenders test whether the new payment fits your budget under UK rules.
• Application timing: Too many applications close together can harm your score. Space them and use soft checks first where possible.

Good behaviour pays off. Keep up payments, trim balances elsewhere, and your next deal usually improves.

How to switch without the faff

1. Check your credit score with a free UK service.
2. Read your loan agreement for early repayment rules.
3. Ask your lender for a settlement figure and date.
4. Use soft search tools to compare APRs and terms.
5. Decide on direct lender or broker based on needs.
6. Apply once you see clear savings and affordability.
7. Use new funds to clear the old loan immediately.
8. Set up direct debit and monitor your credit report.

The upsides and downsides in plain English

Pros:

• Potentially lower APR and total interest.
• One payment for simpler budgeting if consolidating.
• Chance to shorten the term and be debt-free sooner.
• Early repayment options can cut costs further.

Cons:

• Rising 2025 rates and fewer products can limit savings.
• Longer terms may increase total interest, even with a lower monthly payment.
• Multiple applications may dent your credit score.
• Fees and small print can erode the benefits if ignored.

Check this before you press go

• Compare at least three real offers using total repayable.
• Confirm any early repayment charge on your current loan.
• Watch for broker fees and how your data will be shared.
• Avoid applying to lots of lenders at once. Start with soft checks.
• Aim to repay costly revolving debt rather than just shifting it.

If the numbers do not clearly save you money, do not switch.

Alternatives if switching is not right today

• Overpay your current loan if allowed fee-free to cut interest.
• Tackle the highest APR debt first - often credit cards.
• Consider a 0% balance transfer card if you qualify and can clear it within the promotional window.
• Speak to your lender about a payment plan if you are struggling.
• Credit unions may offer fairer rates for eligible members.

Straight answers to common questions

Q: When is the best time to renew or switch? A: When your rate is uncompetitive, you have repaid a decent portion of the balance, or your credit score has improved. Review annually.

Q: Are rates really higher in 2025? A: Yes. Average unsecured APRs have risen to roughly 16.6% in September 2025. That makes careful comparison vital.

Q: Will a broker always be cheaper? A: Not necessarily. Brokers offer wide choice but may charge fees. A direct lender can be simpler and sometimes lower cost.

Q: Does consolidation always save money? A: No. It helps only if the new APR and total repayable beat your current mix and you avoid extending the term unnecessarily.

Q: How many applications can I make? A: Use soft searches first. Too many hard checks close together can harm approval odds and pricing.

Q: Can I repay early without a penalty? A: Some lenders allow it. Check your agreement. If there is no penalty, switching can be cheaper and easier.

Q: How much must I repay before a top-up? A: Many UK lenders want a meaningful chunk paid, often around 30%, but policies vary.

Ready to move - here is your plan

• Run a soft-search comparison today and shortlist three offers.
• Ask your current lender for a settlement figure and early repayment terms.
• Choose direct lender or broker based on cost, speed, and privacy.
• Apply once the numbers show clear savings and the budget works. If you are unsure, speak to a qualified adviser.

Keep it simple: better rate, lower total cost, manageable term.

Plain disclaimer

This guide is general information for UK consumers, not personal financial advice. Always check your lender’s terms and consider speaking to a regulated adviser before switching or renewing. Your credit score and circumstances may affect eligibility and rates.