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The cheapest personal loans

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There's a price war going on so here's a round-up of the best personal loans on the market right now.


If you want to borrow a larger sum of money, a personal loan is a good option for many people.

The good news is there is loads of competition in the personal loan market right now and this means rates on the top loans are falling. Indeed, on some loan sizes the interest rates have NEVER been so low.

Here's our guide to the cheapest rates right now.

A reminder of how personal loans work

Personal loans are normally offered over one to five years and aren’t secured against your home or any other asset.

It's quite a flexible market and you can typically choose between a small loan of £5,000-£7,499, a medium loan of £7,500-£15,000 or a large loan of more than £15,000.

The cheapest rates can be found in the medium range.

Medium loans

Here are the best buys using the example of borrowing £10,000 over five years. The M&S Bank rate is the lowest ever offered on a medium-sized loan!

Loan

Representative APR

Monthly repayment

Total amount repayable

M&S Bank Personal Loan

3.3%

£180.80

£10,848

HSBC Personal Loan

3.3%

£180.80

£10,848

Clydesdale Bank Personal Loan

3.4%

£181.24

£10,874.40

Yorkshire Bank Personal Loan

3.4%

£181.24

£10,874.40

Sainsbury's Bank Personal Loan

3.4%

£181.24

£10,874.40

Tesco Bank Personal Loan for Clubcard Customers

3.4%

£181.24

£ 10,874.40

Nationwide Personal Loan*

3.4%

£181.24

£10,874.40

First Direct Personal Loan*

3.4%

£181.24

£10,874.40

Cahoot Low Rate Personal Loan

3.4%

£181.65

£10,899

Zopa A* Loan

3.5%

£181.65

£10,899

*Existing customers only

You could potentially secure an even lower rate though, if you are a Nationwide current account customer. The building society has launched a price promise, committing to beat any like-for-like loan provider offer by 0.5%. That means you can't take a loan offer from a peer-to-peer lender like Zopa, but a mainstream bank or building society will be fine.

The price promise applies to loans between £1,000 and £25,000 for terms of between one year and seven years.

Small loans (£5,000-£7,499)

The smallest loans on offer, of between £5,000 and £7,499, are also the most expensive.

Here are the best buys using the example of £5,000 repaid over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

Zopa A*

4.3%

£92.56

£5,553.60

Sainsbury’s Bank Personal Loan

4.3%

£92.56

£5,553.60

Hitachi Personal Finance Personal Loan

4.4%

£92.78

£5,566.80

Clydesdale Bank Personal Loan

4.4%

£92.79

£5,567.40

Cahoot Low Rate Personal Loan

4.4%

£92.79

£5,567.40

RAC Loan

4.4%

£92.79

£5,567.40

Yorkshire Bank Personal Loan

4.4%

£92.79

£5,567.40

M&S Bank Personal Loan

4.5%

£93.01

£5,580.60

Nationwide BS Personal Loan*

4.5%

£93.01

£5,580.60

*Existing customers only

Large loans (more than £15,000)

As you can see, there are plenty of loans available at rates of less than 4% if you are looking for such a sizeable loan.

Here's how the providers compare on a loan of £17,500 over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

First Direct Personal Loan*

3.4%

£317.47

£19,048.21

Cahoot Low Rate Personal Loan

3.4%

£317.89

£19,073.40

Sainsbury’s Bank Personal Loan

3.4%

£317.17

£19,030.20

Zopa A* Loan

3.6%

£318.97

£19,138.20

Santander Personal Loan

3.6%

£318.99

£19,139.40

Clydesdale Bank Personal Loan

3.8%

£320.21

£19,212.60

Yorkshire Bank Personal Loan

3.8%

£320.21

£19,212.60

Nationwide BS Personal Loan*

3.9%

£320.96

£19,257.60

TSB Personal Loan*

3.9%

£320.96

£19,257.60

*Existing customers only

Not for everyone

All of the loans in the above tables offer attractive rates but not everyone will be offered loans at these rates. Lenders are only obliged to offer their best rates to 51% of successful applicants.

If you have a history of borrowing money and then paying off your debts on schedule, there’s a good chance that you’ll be able to borrow at a decent rate. But if you’ve never borrowed money before or you’ve been late with repayments, you may not be able to get the best deals.

Personal loan alternatives

It’s also possible that you may be able to borrow even more cheaply.

If you have an excellent credit rating, you may be able to get a 0% new purchase credit card. With one of these cards you can make a big purchase and not pay any interest on the resulting debt for two years or more.

The Post Office Matched Card, offers 27 months of 0% interest on spending, more than any other card.

For a full rundown, check out The best 0% purchase credit cards.

Just remember that you may be offered a fairly low credit limit – if you’re only offered a £2,000 credit limit, you may want to go for a personal loan where you can borrow more.

Do you need to borrow?

Whatever kind of loan you go for, first ask yourself first whether you actually need to borrow the money. Even if you’re paying a super-low interest rate, you’re still giving up money on interest payments which you’ll never see again.

The prudent approach is to cut your spending and build up your savings, if you can. If you follow that approach, you’ll be richer in the long-run.

But if you’re determined to borrow, a personal loan may well be the best option for you.

More on loans and borrowing:

Top tips for cheap car loans

Five ways to get a great loan

Secured loans: pros and cons

The best 0% purchase credit cards

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