APR, or your Annual Percentage Rate, is the interest rate at which you pay back money you’ve borrowed. It takes into account the actual interest rate you pay, plus any other fees or charges involved in the deal, to give you a more complete picture of what your loan will cost.

When you see a rate advertised as the representative APR, this means the lender is required to offer this rate to at least 51% of applicants – however it doesn’t mean you’re guaranteed to receive this interest rate yourself.

A soft search or soft application is a way of finding out where you stand in terms of getting a loan without leaving a mark on your credit report. It’s a way to find out if you’re eligible for a loan without harming your chances of being accepted.

There are lots of things you can use a £40k loan for.  A popular use is for home improvements, which could add to your property’s value. In some cases a loan might be used to consolidate existing debts, giving you the opportunity to clear what you owe elsewhere and then pay back your loan in a series of affordable monthly repayments at a lower rate of interest than you were previously paying.

All lenders will have different criteria to decide whether to accept a borrower for a £40k loan. But generally, the higher your credit score, the better your chance of approval and at lower interest rates. Our guide to What is a good credit score? provides more information.

You'll usually be able to pay off your £40,000 loan early, but your lender might apply early repayment charges and these can be high – so think about this before you redeem your loan. Check the terms and conditions when you sign up for a loan and take note of any ERCs - particularly if you think there is a chance you may want to clear the debt early.   

Once approved, you should receive your money within a matter of days. Each lender has different terms for how quickly they release the funds.

If you can’t make the repayments on your loan contact your lender as soon as possible. It should help you work out a reasonable solution, such as a short-term payment holiday, if appropriate, (although you’ll still accrue interest during that time), or restructuring your loan to make it more affordable.

If you miss a repayment you’re likely to be hit with late fees and extra interest – and it could damage your credit score. Try to avoid this if at all possible by talking to your lender as soon as you realise you could have problems. This is particularly important if you have a secured loan, because you could be in danger of losing your home if you have repayment problems and you don’t raise the issue quickly with your lender.