How are loans charged? A personal loan is a lump sum that you typically borrow from your bank or building society bank, or through a retailer where you are buying an expensive item such as a car or domestic appliance. You agree to pay back the loan over a fixed number of months (called the “term”) by making set monthly payments. There may or may not be an arrangement fee when you take out the loan, depending upon the lender chosen. You can usually pay extra for payment protection insurance whi.