The UK has the least affordable personal loans in Europe, new research suggests.
Loan experts Lånea used data from Trading Economics, the Organisation for Economic Co-operation and Development (OECD) and Numbeo to work out which countries had the most affordable loans in Europe.
The data was collected by calculating the disposable income of each country and the total cost of a personal loan repayment of 10 percent the average salary (plus the national rate of interest) was then calculated as a percentage of the income.
Luxembourg came out on top of the rankings with a personal loan repayment of £535.10 per month, equivalent to 18.98 percent of the average disposable income.
This was calculated based on average living costs of £27,609.71 per year, and the average annual salary of £61,446.99, leaving an estimated disposable income of £2,819.77 per month.
Ireland came in second with a personal loan repayment of 19.27% of the average disposable income, which equated to £341.28 per month. This was taken from a national interest rate of 4.5 percent on top of a personal loan cost of £3,918.95.
On the other end of the spectrum, the United Kingdom was identified as the worst country to take out a personal loan, with a personal loan repayment of 61.40 percent of the average disposable income.
This corresponded to £249.95 per month, which was subtracted from an average disposable income of £407.11 per month.
Personal finance expert Nina Appelgren of Lånea offered advice for people thinking of taking out a personal loan: “There are lots of things to remember when taking out a personal loan, and each person’s unique financial situation must be considered. Credit scores, interest rates and repayment terms are all things to keep in mind.
“Make sure you understand the purpose of your loan and form a plan on how you intend to use the funds. If necessary, look for lenders that offer flexible repayment options, and be aware of any additional fees or charges that may incur during the application process.
Ms Appelgren advised people to compare different lenders to find the most suitable for you and to try not to borrow more than is absolutely necessary or for a longer period of time than is required.
She said: “Finally, it’s a good idea to read reviews to provide insight into customer service and satisfaction. Ensure you read the terms and fine print before you agree to anything.”