Where to borrow a large sum for less

Updated: 
PoundsPersonal loan rates are falling again as lenders compete to offer the lowest-price deal.

You can now borrow between £7,500 and £15,000 at an interest rate of just 4.8%, providing you have a decent credit rating.




The 4.8% rate is being offered by a company called Zopa.

Zopa is one of a number of so-called peer-to-peer lenders, where individuals can lend their money to other individuals. More savers are increasingly turning to them as rates on normal savings accounts continue to fall.

Meanwhile, Hitachi Personal Finance, a financial arm of the electronics giant, is now offering a representative rate of 4.9% on loans of between £7,500 and £10,000.

That makes it the market leader among the 'ordinary' lenders.

Let's take a look at the cheapest rates, using the example of £10,000 borrowed over five years.
LenderRepresentative APRTotal amount repayable
Zopa4.8%£11,239.80
Hitachi Personal Finance4.9%£11,266.20
Clydesdale Bank5.0%£11,292.00
Derbyshire Building Society5.0%£11,292.00
M&S Bank Cardholder Loan*5.0%£11,292.00
Sainsbury's Bank Standard Loan5.1%£11,318.40
Tesco Bank Personal Loan5.1%£11,318.40

*Available to existing M&S Bank customers only

For lower amounts
Somewhat bizarrely, if you want to borrow less, you'll pay more interest. Here's an example of rates for £5,000 repaid over five years.
LenderRepresentative APRTotal amount repayable
Zopa6.3%£5,817.60
Clydesdale Bank6.4%£5,830.80
Hitachi Personal Finance6.5%£5,844.00
Sainsbury's Bank Standard Loan6.9%£5,896.80
M&S Bank Cardholder Loan*6.9%£5,896.80
Tesco Bank Personal Loan7.0%£5,910.00
*Available to existing M&S Bank customers only

For larger amounts
Meanwhile, Sainsbury's and Tesco were fighting it out at the top of the best buy table for customers looking to borrow more than £15,000. However, they've now been knocked off top spot by Clydesdale Bank.

Here's how rates look if you want to borrow £17,500 over five years.
LenderRepresentative APRTotal amount repayable
Clydesdale Bank6.8%£20,592.00
Sainsbury's Bank Standard Loan6.9%£20,638.20
Tesco Bank Personal Loan6.9%£20,638.20
Sainsbury's Bank Shopper Reward Loan7.2%£20,778.00
M&S Bank Cardholder Loan*7.2%£20,778.00
*Available to existing M&S Bank customers only

If you're wondering what the difference between a Sainsbury's Standard Loan and Reward Loan is, the Reward Loan earns you more Nectar points. But it also costs more.

Are you representative?
And if you're wondering why the term 'representative APR' is being used, that's because not everyone is guaranteed to get this rate. In fact, lenders only have to offer it to 51% of borrowers.

So if your credit rating isn't fantastic, then you may not get the best rate, or get offered a loan at all.

Compare personal loan rates