The UK's cheapest personal loans: best buys

Find out where you can borrow between £7,500 and £15,000 for just 2.8% with our best buy personal loan round up.

If you are in need of a personal loan, it might be worth applying sooner rather than later.

LoveMONEY analysis of the best buy loan tables shows how the cheapest rates have begun to tick upwards on both medium and larger loans in recent weeks.

The rate on smaller loans has thankfully remained unchanged.

What we found

On 13 July, the cheapest rates on a medium-sized loan (£10,000, spread over three years) was 2.7%, while the average rate of the cheapest deals featured in the best buy tables was 2.89%.

The cheapest large loan (£17,500 over five years) was available at 2.8%, with the average ‘best buy’ rate of 2.96%.

We conducted the same comparisons last week and found a clear increase.

On medium loans, the cheapest loan rate had crept up to 2.8%, with the average 2.96%.

On larger loans, the headline rate of 2.8% was still available, but the ‘best buy’ average had jumped to 3.1%.

Now, admittedly these aren’t huge sums – the total bill on medium loans is up £10 on average, while large loans it’s £65 – but it’s a cause for concern nonetheless.

We’ll be keeping an eye on what happens next with rates, but it could be worth applying sooner rather than later.

Below is our round-up of the cheapest loans, but before we jump into the comparison tables, here’s a quick recap of how personal loans work.

The basics

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.

Compare personal loans

Medium loans (£7,500-£15,000)

Here are the lowest rates when borrowing £10,000 over three years.

Loan

Representative APR

Monthly repayment

Total amount repayable

M&S Bank Personal Loan

2.8%

£289.78

£10,432.08

Asda Money Personal Loan

2.8% £289.78 £10,432.08

TSB Personal Loan

2.8%

£289.98

£10,439.28

Sainsbury's Bank Nectar Personal Loan*

2.9%

£290.20

£10,447.20

Sainsbury’s Bank Personal Loan

3%

£290.63

£10,462.68

Zopa Personal Loan

3%

£290.81 

£10,469.16

Admiral Personal Loan

3.1%

£291.06

£10,478.16

Hitachi Personal Finance
Personal Loan

3.1%

£291.06

£10,478.16

Tesco Bank Personal Loan for Clubcard Customers**

3.1%

£291.06

£10,478.16

Tesco Bank Personal Loan

3.2%


£291.49 

£10,493.64

*Nectar card holders only

*Clubcard customers only

As you can see, M&S Bank is the joint-cheapest personal loan provider along with Asda Money, which both offer a low rate of 2.8%.

Large loans (more than £15,000)

If you need to borrow more the rates are still competitive. 

Here’s what you can get when borrowing £17,500 over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

TSB Personal Loan

2.8%

£312.63

£19,349.16

Asda Money Personal Loan 2.8% £312.95 £18,777.30

Sainsbury’s Bank Personal Loan

3%

£314.14

£18,848.40

Tesco Bank Clubcard Cardholder Personal Loan*

3.1%

£314.89

£18,893.40

Tesco Bank Personal Loan

3.2%

£314.89

£18,893.40

Zopa Personal Loan 

3.3%

£316.37

£18,982.20

Hitachi Personal Finance
Personal Loan

3.3%

£316.41

£18,984.60

AA Personal Loan

3.3%

£316.41

£18,984.60

*Clubcard customers only

Small loans (£5,000-£7,499)

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

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

Loan

Representative APR

Monthly repayment

Total amount repayable

TSB Personal Loan

3.3%

£90.50

£5,430

Hitachi Personal Finance Personal Loan 

3.4%

£90.62

£5,437.20

M&S Personal Loan

3.6%

£91.05

£5,463

Asda Money Personal Loan 3.6% £91.10 £5,466.23

Zopa Personal Loan

3.6%

£91.13

£5,467.80

Ratesetter 5 Year Loan 

3.7%

£91.36

£5,481.60

Sainsbury's Bank Personal Loan

3.8%

£91.49

£5,489.40

Tesco Bank Clubcard Cardholder Personal Loan*

3.8%

£91.49

£5,489.40

*Clubcard customers only

Not for everyone

All of the loans in the above tables offer attractive deals 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 AA Dual Credit Card currently has the longest 0% new purchase offer on the market at 32 months.

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.

This article is regularly updated

More on loans and borrowing:

The best 0% purchase credit cards

How to get an interest-free loan

 

 

 

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