The cheapest loan rates have been pretty stable recently, though they’re close to double what they were a couple of years ago. If you NEED to borrow, this guide has full info on the cheapest loans – how to get them, and what to watch out for. Plus, our Loans Eligibility Calculator helps you find loans more likely to accept you.
What is a personal loan?
Personal loans, also known as unsecured loans, are where you borrow a sum of money from a lender, and agree to pay it back over a set time period in fixed monthly repayments.
The lender will charge you interest as its fee to lend money to you, so you repay the amount you borrowed plus interest. The advantage is you get cash upfront, but can spread the cost of a purchase over several months or years.
This guide details the cheapest personal loans, but also addresses whether other finance options, such as credit cards, might be cheaper for you. Plus, we’ve our clever Loans Eligibility Calculator, which can tell you which lenders are likely to accept you before you apply.
What can I use a personal loan for?
While technically you can use a personal loan to pay for anything, a lender is likely to ask you why you want the loan. Generally most personal loans are taken out for…
- Home improvement
- Buying a new car
- Wedding expenses
- Covering an emergency (for example, car/home repairs)
- Debt consolidation (though be careful with this)
Best-buy personal loans
If you’re looking for a loan, check out the best-buy rates below. We list loans by ‘bands’ as the rate you could get differs depending on how much you want to borrow.
Cheapest loans under £3,000
As we warn above, while you should only borrow what you NEED, a peculiar quirk means you can sometimes pay less by getting a slightly bigger loan. Rates of loans under £3,000 are the most expensive, so always check if it’s actually cheaper to borrow slightly more.
Important. For loans up to £5,000 you could be much better off using a money transfer credit card if you can repay the full balance over 9-12 months.
If the above doesn’t work, you could combine smaller personal loans or remortgage, though that usually means extending the term, more interest and securing the debt on your home.
Want to complain about your loan provider?
If your loan provider has charged you the wrong amount, taken the wrong amount in payment, or its service has been atrocious, then you don’t have to suffer in silence. It’s always worth trying to call your lender first to see if it can help, but if it can’t (or won’t), or it doesn’t get back to you…
You can use free complaints tool Resolver. The tool helps you manage your complaint, and if the company doesn’t play ball, it also helps you escalate your complaint to the free Financial Ombudsman Service.