Top loans for November

We look at the best ways to borrow in the run-up to Christmas.

If you think you may need to borrow to pay for the cost of Christmas, we have some good news for you.

Rates on personal loans are falling. 

You may be able to get a loan which charges as little as 6.1% a year! 

This is a great step forward for borrowers. Last year, rates were much higher. 

Here are the top loans on the market right now: 

 All these rates are for loans between £7,500 and £15,000. 

These are cracking rates but before you rush off and apply for one of them, here are some things to think about first: 

1. Do you really need to borrow?

Even though interest rates are relatively low at the moment, taking out a loan will still cost you a significant amount of money. If you took out the Alliance & Leicester Aggregator Loan and borrowed £10,000 over five years, you’d end up paying £1,634.60 in interest over the course of the loan. You’d also have to pay back £193.91 a month. 

So ask yourself: will I be able to meet these monthly payments? Do I really need to borrow? 

You could save yourself a lot of money if you don’t. 

2. Not everyone will get these rates

If your credit record is poor, lenders may not wish to lend to you. And even if you’re able to get a loan, you may not get the best rate. Lenders are only obliged to offer their best rate to 51% of successful applicants. 

What’s more, most lenders only offer their best rates to people who wish to borrow between £7,500 and £15,000. 

3. Don’t be tempted by payment holidays

Some lenders will offer you the option of a ‘payment holiday’ where you won’t have to make any debt repayments for a period of months. These holidays sound nice, but they come with a sting in the tail – it will take you longer to pay off the loan and you’ll end up paying more in interest as a result. 

4. Think about social lending

You don’t have to go to a traditional bank anymore. You can borrow from a group of private individuals via social lending sites such as Zopa and Ratesetter. With these sites, you’ll get the satisfaction of knowing that you’re not contributing to the big banks’ profits. 

However, the lowest social lending rates aren’t quite as low as the best personal loan rates at the moment. What’s more, the best rates will only be offered to high quality applicants and some applicants will be turned down completely. 

5. Consider other options

If you just need to borrow a small amount of money, you may be better off going for a credit card. 

If you took out a 0% on purchases credit card, you could make a big purchase with your new card and not pay any interest on the resulting debt for up to 15 months. 

At the moment, the best 0% on purchases cards are the Tesco Clubcard MasterCard and the M&S Credit Card. They both offer 15-month 0% periods. Be careful though – the 15 month period begins when you take out the card, not when you make the purchase. 

For a larger sum, you could consider borrowing some extra cash via your mortgage. If you want to do this, approach your lender and ask for a ‘further advance.’ 

This is a tempting route in some ways as the interest rates on most mortgages are so low at the moment. The problem, however, is that mortgages are long-term loans, so you may end up paying more interest than you expect, unless you’re allowed to overpay and you can pay off the debt quickly. 

More: Why being an 'average' borrower will cost you  |  Get a loan by applying tactically