Fast, unsecured, for almost anything. Which is exactly why they deserve more attention than they usually get. The maximum rates in force, a worked example and the list of what to look at before signing.
What it is actually for
A personal loan is borrowed money with no mortgage or retention of title, usually over 1 to 7 years. It serves for renovations, furniture, studies, health, an event, or to bring scattered loans together into a single instalment.
What makes it expensive is the same thing that makes it easy: there is no security, so the bank charges more interest. Comparing it with a mortgage makes no sense; comparing it with a credit card makes every sense.
The maximum rates in force
Every quarter, Banco de Portugal sets the maximum APRC each type of credit may carry. For the 3rd quarter of 2026: personal loans for other purposes (home, renovations, consolidation) 15.3%; personal loans for education, health and energy transition 8.9%; credit cards, credit lines and overdrafts 18.5%.
These are ceilings, not prices. A well-negotiated loan sits well below them. But if you are offered an APRC above the maximum, it is illegal.
A worked example
- At an APRC of 8.9% (education, health or energy purpose): about €248 a month, €11,920 in total.
- At an APRC of 15.3% (the maximum for other purposes): about €280 a month, €13,430 in total.
- The difference after 4 years is €1,500. That is the cost of not comparing, or of ticking the wrong purpose on the form.
The flexible part and the trap
Longer terms lower the instalment and raise the total cost. €20,000 at 10% costs €425 a month over 5 years and €332 over 7, but the 7 years come out €2,400 more expensive. Choose the shortest term your budget can carry without choking.
The usual traps: payment protection insurance that doubles the instalment, hidden arrangement fees, and the "pre-approved loan" that pops up in the app at a rate nobody would compare if they had to look for it.
Consolidating loans: when it makes sense
If you have a card, a car loan and a small loan at rates between 12% and 19%, bringing everything into one personal loan at a lower rate can reduce the monthly instalment and the total cost. It makes sense when the new APRC is clearly below the weighted average of the old ones and the term does not stretch too far.
It does not make sense when it is just to "breathe" this month and the problem is spending more than you earn. There, the loan does not solve anything; it postpones it.
A 6-point checklist
- APRC, not the nominal rate. It is the number that includes fees and insurance.
- Total amount payable: what you pay in total by the end of the term.
- Arrangement fee and early repayment fee.
- Insurance: is it compulsory? How much does it cost? Can you bring your own?
- The right declared purpose: education, health and energy have a lower ceiling.
- A calculation with the shortest possible term and an instalment that keeps you below a 35% debt-to-income ratio.
Frequently asked questions
Can I repay a personal loan early?
Yes. The early repayment fee on consumer credit is capped by law at 0.5% of the capital repaid (0.25% if less than a year remains).
What is the difference between a personal loan and a credit card?
The card is revolving credit with a maximum APRC of 18.5%; the personal loan has a fixed term and instalment and a ceiling of 15.3%. For large purchases you will pay off over more than three months, the personal loan is usually cheaper.
Does the Guru handle personal loans?
Yes, through the partner banks. The service is still free for you.