Revealed: the UK’s cheapest personal loans

comparison deals

If you need to borrow a larger sum of money, then a personal loan could be a good option.

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 (£7,500-£15,000)

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

LoanRepresentative APRMonthly repaymentTotal amount repayable
M&S Bank Personal Loan2.8%£289.78£10,432.08
Asda Money Personal Loan2.8%£289.78£10,432.08
TSB Personal Loan2.8%£289.98£10,439.28
Sainsbury's Bank Nectar Personal Loan*2.9%£290.20£10,447.20
Sainsbury's Bank Personal Loan3%£290.63£10,462.68
Personal Loan
3%£290.81 £10,469.16
Admiral Personal Loan3.1%£291.06£10,478.16
Hitachi Personal Finance
Personal Loan
Tesco Bank Personal Loan for Clubcard Customers**3.1%£291.06£10,478.16
Tesco Bank Personal Loan3.2%
*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.

LoanRepresentative APRMonthly repaymentTotal amount repayable
TSB Personal Loan2.8%£312.63£19,349.16
Asda Money Personal Loan2.8%£312.95£18,777.30
Sainsbury's Bank Personal Loan3%£314.14£18,848.40
Tesco Bank Clubcard Cardholder Personal Loan*3.1%£314.89£18,893.40
Tesco Bank Personal Loan3.2%£314.89£18,893.40
Zopa Personal Loan3.3%£316.37£18,982.20
Hitachi Personal Finance
Personal Loan
AA Personal Loan3.3%£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.

LoanRepresentative APRMonthly repaymentTotal amount repayable
TSB Personal Loan3.3%£90.50£5,430
Hitachi Personal Finance Personal Loan3.4%£90.62£5,437.20
M&S Personal Loan3.6%£91.05£5,463
Asda Money Personal Loan3.6%£91.10£5,466.23
Zopa Personal Loan3.6%£91.13£5,467.80
Ratesetter 5 Year Loan3.7%£91.36£5,481.60
Sainsbury's Bank Personal Loan3.8%£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.

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