AA Loans

Find out more about the personal loans offered by AA loans, including how they work and how much you could potentially borrow.

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CONNOR CAMPBELL

LEAD WRITER

The AA is for more than just breakdowns. Although most associated with vehicles, The AA also acts as a credit broker for unsecured personal loans provided by the Bank of Ireland UK.

These loans – which start at £1,000 and go up to £25,000 – don’t have to just be used for getting a new car. You can put your funds towards your wedding, home improvements, and plenty of other things.

Sticking with what most people know the company for, The AA also throws in 12 months’ free breakdown cover when you take out a loan.

AA personal loans

The AA has temporarily stopped offering loans to new customers.

AA acts as a credit broker for fixed rate personal unsecured loans provided by the Bank of Ireland UK. This means if you take out an AA loan, you won’t be borrowing money from AA, but rather from the Bank of Ireland.

If you do take out an AA loan, you would then repay the sum in monthly instalments, with interest on top.

» COMPARE: Personal loans

How much can I borrow?

Through The AA, you can borrow as little as £1,000, and as much as £25,000. You should think carefully about how much you need to borrow before applying.

With an AA loan, the amount you borrow will inform the maximum repayment period. For example, if you borrow £5,000 or more, your repayment period can be up to seven years. However, if you were to borrow up to £2,900, the maximum repayment period is three years.

What are the interest rates on a AA loan?

Numerous factors influence the interest rate you can get on an AA loan, including the amount you are looking to borrow, how long you are seeking to borrow for, and your personal financial circumstances.

Whatever your interest rate is, it will be fixed for the lifetime of your loan.

Where AA loans differs from other providers is that you can benefit from the broker’s best rates if you are an AA member.

Can I get a joint loan from AA?

At present, you cannot get a joint loan through The AA.

A joint loan is a form of borrowing where more than one person signs onto the loan, and are jointly liable for repaying the debt.

Common types of joint loans include joint mortgages and overdrafts on joint bank accounts. However, it is also possible to apply for a joint personal loan.

Can I get a secured loan from AA?

Currently you cannot get a secured loan through The AA.

Unlike an unsecured loan, a secured loan requires you to put up an asset of value, for example your home, as security when applying for a loan.

» COMPARE: Secured loans

What bonuses do I get with an AA loan?

When you take out a loan through The AA, you will receive 12 months’ Basic Breakdown Cover for free.

If you are already an AA member, you will instead be able to choose National Recovery, At Home or Onward Travel as an add-on for the remainder of your membership.

» COMPARE: Car breakdown cover

Pros and cons of AA loans

Make sure to weigh up the advantages and disadvantages of taking out an AA loan before applying.

Pros

  • There are no arrangement fees or set-up charges when taking out a loan through AA.
  • You get free breakdown cover, or an add-on if you are an existing member, when taking out an AA loan.
  • You could benefit from the broker’s lowest interest rates if you are an existing AA member.

Cons

  • The AA is a credit broker rather than a direct lender.
  • You cannot get a secured personal loan through The AA.
  • You may be charged up to 58 days’ interest if you want to repay your loan early.

How do AA loans work?

Once you have submitted your application for an AA loan, the broker will assess your suitability, including carrying out the relevant credit checks.

If your application is successful, you will be offered a loan with a personalised interest rate based on your financial circumstances. You are free to accept or decline this offer.

If you accept your offer, you will be sent a loan agreement in the post. You will need to sign this agreement and return it to The AA by post in order to unlock your funds.

You should also know that you have a 14-day cooling-off period to cancel your loan, starting from the date you sign your loan agreement or when you receive a copy of your agreement, whichever is later. If you do cancel the loan, you will have 30 days to repay the capital and interest.

What if I miss a payment?

For each missed or unpaid repayment, you will be charged £12, while interest accrues on any overdue amounts at the interest rate stated in your loan agreement.

If you continue to miss payments, you may be sent a default notice asking you to pay by a certain date. If you cannot do this, the lender may demand immediate payment in full, or terminate the loan agreement. Legal proceedings may also be taken against you to recover the unpaid debt.

On top of this, missed payments may negatively affect your credit history, making it harder to borrow in the future.

Can I pay off a AA loan early?

It is possible to fully pay off your AA loan early at any time. However, you may be charged up to 58 days’ interest if you do so.

What can I use a AA loan for?

There are a number of different things you can do with a AA loan, including:

Buying a car

Purchasing a car with your AA loan might be the first thing that comes to mind due to the company’s history. However, it is important to know that you are not limited to vehicle-related spending.

Home improvements

Whether you want to convert your attic, add a conservatory or do up your kitchen, you can use your AA loan for a range of home improvements.

Weddings

If you need help paying for your big day, you may want to consider using your AA loan to cover some of your wedding costs.

Debt consolidation

If you have multiple debts across different lenders, you may consider using your AA loan for debt consolidation. This is when you pay off your existing debts in order to instead make one, simplified monthly payment.

Before doing this, however, you should make sure to thoroughly calculate whether the cost of this single loan is higher than the cost of the replaced debt, and if you will incur charges for paying off your other debts early.

Although you may still want to proceed with debt consolidation even if the overall cost is higher, it is always a good idea to know exactly how it will affect your finances before making a decision. You should also try to avoid further borrowing if you decide to consolidate debts in this way.

AA loan eligibility criteria

To be eligible for an AA loan, you need to:

  • have been a UK resident for at least three years
  • be older than 21 years old at the time of application, and no older than 70 when the loan term ends
  • have a salary of at least £12,000
  • not have any country court judgements (CCJs) or a history of bankruptcy
  • have a UK-based bank account, or building society account, able to make direct debits

You will also need to pass The AA’s credit checks.

Can I get a AA loan with bad credit?

Having a poor credit score, or no credit history at all, can make it much harder to successfully apply for a loan. If you are successful under these circumstances, you will likely be offered a higher interest rate.

Currently The AA does not offer specific bad credit loans.

» COMPARE: Bad credit loans

Can I top up a AA loan?

It is possible to top up your AA loan. If you do need to borrow more, The AA will pay off the remainder of your existing loan, and then open a new loan combining how much you had left on your first loan with the extra amount you want to borrow.

You should be aware that when this happens, your new loan may come with a different interest rate to your initial loan. The same is true of your loan term.

Alternatively, you could take out a second loan through The AA. This would leave you with two monthly repayments, potentially with different interest rates.

How to apply for a loan from AA

When applying for an AA loan, you will likely need to complete the following steps:

  1. You submit your application, alongside the required information and documents.
  2. The AA will assess your suitability for a loan, including carrying out a credit check. You will either receive an instant decision online or be required to supply The AA with additional information. If you do need to supply more information, The AA will contact you by post within five days of your application.
  3. The AA will either reject or approve your application. If you are approved, you will be sent a loan agreement in the post.
  4. You will need to carefully read over the loan agreement and, if you are happy, sign it and return it to The AA by post.
  5. The AA will try to pay the funds into your bank account within two days of receiving your signed loan agreement.

How long does it take for an AA loan to be approved?

How quickly you are approved for an AA loan depends on your financial circumstances. Some people will receive an instant decision online. Others may have to supply The AA with more information, which will delay any potential approval.

AA customer reviews

As a broker, AA loans are provided by Bank of Ireland UK.

Bank of Ireland UK has a Trustpilot score of 1.4 out of 5 based on 433 reviews.

This information is correct as of 27 September 2022.

AA Loan FAQs

What is an AA loan?

The AA is only a credit broker, rather than a direct lender. An AA loan is actually provided by the Bank of Ireland UK. So when you apply for an AA loan, you should keep in mind that the lender you are borrowing from is the Bank of Ireland UK.

Are AA loans secured?

No, AA loans are not secured. Instead, an AA loan is an unsecured personal loan. This means that, unlike with secured loans, you do not need to provide an asset as security.

About the author

Connor Campbell
Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more

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