Grab cheaper personal loan rates while you still can

Loan rates are creeping up again, but there are still some great deals if you're quick.

Updated: 
Grab cheaper personal loan rates while you still can
Lenders have been locked into a personal loan price war for some time now, which have driven down rates to record lows over the last few years. However, research from financial data experts Moneyfacts suggest the rates on personal loans are starting to creep up.

It found the average rates on medium and larger loans have jumped for the first time this year across the board. The table below charts how rates have changed on loans taken out over five years.

Loan amount

Average APR Jan-16

Average APR Feb-16

Average APR Mar-16

Average APR Apr-16

£7,500

5.7%

5.4%

5.3%

5.4%

£10,000

5.6%

5.3%

5.2%

5.3%

£15,000

5.8%

5.4%

5.3%

5.4%

£20,000

6.4%

6.1%

5.9%

6.0%

£25,000

6.4%

6.0%

5.8%

6.1%

As you can see the average APR across medium and larger loans have steadily fallen from January through to March, but figures for April show rates edging up by at least 0.1%.

The good news is there are still lots of providers offering record low rates, but they may not be around for long so you should move quickly to take advantage.

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

Medium loans (£7,500-£15,000)

Here are the best rates when borrowing £10,000 over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

Ikano Bank Personal Loan

3.2%

£180.37

£10,822.20

M&S Bank Personal Loan

3.3%

£180.80

£10,848

HSBC Personal Loan

3.3%

£180.80

£10,848.30

Zopa A* Loan

3.3%

£180.99

£10,859.40

Tesco Bank Personal Loan for Clubcard Customers

3.4%

£181.23

£10,873.80

Sainsbury's Bank Personal Loan

3.4%

£181.24

£10,874.40

Nationwide Personal Loan*

3.4%

£181.24

£10,874.40

First Direct Personal Loan*

3.4%

£181.41

£10,884.69

Cahoot Low Rate Personal Loan

3.4%

£181.65

£10,899


*Existing customers only

You could potentially secure an even lower rate, with Sainsbury's Bank and Nationwide Building Society.

Sainsbury's Bank has a Price Promise which guarantees that if you are offered a like for loan elsewhere that has a lower APR it will beat it by 0.1%.

Meanwhile if you are a Nationwide current account customer, the building society will 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.

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

Sainsbury's Bank Personal Loan

3.4%

£317.17

£19,030.20

Tesco Bank Personal Loan for Clubcard Customers

3.4%

£317.17

£19,030.20

First Direct Personal Loan*

3.4%

£317.47

£19,048.21

Cahoot Low Rate Personal Loan

3.4%

£317.89

£19,073.40

Zopa A* Loan

3.5%

£318.20

£19,092

Santander 123 World Personal Loan*

3.5%

£318.23

£19,093.80

*Existing customers only

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

Ikano Bank Personal Loan

4.1%

£92.14

£5,528.40

Zopa A*

4.3%

£92.52

£5,551.20

Hitachi Personal Finance Personal Loan

4.2%

£92.53

£5,551.80

Sainsbury's Bank Personal Loan

4.3%

£92.57

£5,554.20

RAC Loan

4.4%

£92.79

£5,567.40

M&S Bank Personal Loan

4.5%

£93.01

£5,580.60

Cahoot Low Rate Personal Loan

4.4%

£92.88

£5,572.80

Santander 123 World Personal Loan*

4.4%

£92.88

£5,572.80

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

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.

Compare personal loan rates

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