
Cheap Personal Car Loans
Borrow at 2.8% for £7.5k+
Personal loan rates are near all time lows and are one of the cheapest ways to buy a car. If you know what you're doing, go straight to the Loans Eligibility Calculator to find which loans are most likely to accept you. But, if you need a bit more help, our guide has full info on how personal car loans work, whether other car finance could work out better and the best buy loans.
Not the car finance option you were looking for? Check these out...
Personal Contract Purchase (PCP) | Hire purchase (HP) | Car leasing

What is a personal loan?
Personal loans, also known as unsecured loans, are where you borrow a sum of money from a lender, and agree to pay it back over a set time period in fixed monthly repayments.
The lender will charge you interest as its fee to lend money to you, so you repay the amount you borrowed plus interest. The advantage is you get cash upfront, but can spread the cost of a purchase over several months or years.
If you’re buying a new or used car and NEED to borrow (ie, your car is a wreck and must be replaced yet you don't have enough in savings to cover it and can't wait until you would) a personal loan can be a cheap way to do so, as rates are currently at near to all-time lows.
This guide has details of the cheapest personal loans, plus our Loans Eligibility Calculator will show you which lenders are likely to accept you before you apply.

How does it work when buying a car?
Once you’ve found a car you want to buy, you’ll know the amount you want to borrow. Ideally this should be based on the price of the car minus any amount you have in savings to contribute, minimising the amount you need to borrow at a cost.
With a personal loan, you borrow an agreed sum, then repay it in fixed monthly payments, at a fixed interest rate, usually over a period of one to five years. The rate you get will depend on how much you want to borrow and other factors such as your credit score. We list the cheapest rates below and our eligibility calculator will show you which loans you've the best chance of getting, in your own personal best-buy table.
Note that these rates are 'representative', meaning only 51% of successful applicants have to get them. So you could apply and be offered a more expensive rate.
Once accepted for a loan, the cash is usually deposited into your nominated bank account, so you're then able to pay the full amount for your car.
Pay just a penny with a credit card to get greater protection
If the seller accepts payment by credit card, pay even a penny towards the car on it and you'll get powerful Section 75 protection (provided the car costs between £100 and £30,000). The credit card provider is then jointly liable with the car dealer should anything go wrong, so means it should be a lot easier to sort out any issues with the car further down the line.
What happens at the end of the loan?
Once all the repayments have been made, that's it. The lender marks the loan as settled on your credit file, and you have nothing left to pay.

Is a personal car loan the right option for me?
There are so many different options when it comes to buying a car, it can be difficult to choose. Here are the main benefits and pitfalls of choosing a personal car loan:
Pros
Unless you can get 0% finance from the dealer, personal loan rates tend to be cheaper than dealer finance.
It's simple to arrange and understand.
It's flexible – with terms from 1-7yrs (the longer the term, the more interest you’ll pay).
You can use our eligibility calculator before you apply to find out which loans you're likely be accepted for.
You'll own the car as soon as you've transferred the cash to the dealer. This means you're able to modify it exactly how you want.
You're not tied to just buying from a dealer, you're able to buy a car from a private seller if you choose to. Prices here are often cheaper plus you can haggle on top.
Cons
Unless you've an excellent or good credit score, you may not be offered any loan.
Monthly payments are higher than for some other forms of car finance (as you're repaying the balance).
You won't get a manufacturer's contribution that's sometimes offered if you take out its finance.
As you own the car outright, you're responsible for all repairs.
The car's value will usually depreciate, so it'll be worth a lot less than you paid when you sell it.
If you want a new car every few years, it'll be a hassle to do it this way as you need to sell the car and buy a new one every time. Leasing or Personal Contract Purchase (PCP) is much more suited if you'll want to keep trading up.
Different car finance options compared
Broadly speaking, there are six different ways to pay for a car. The table has the key differences at a glance.
Finance type | Typical length of agreement? | Initial deposit required? | Who owns the car? | Mileage restrictions? |
None – cash savings | N/A | N/A | You | No |
0% credit card | Up to 20 months | No | You (though you'll still need to repay the debt) | No |
Personal loan | 1-7 years | No | You (though you'll still need to repay the debt) | No |
Personal Contract Purchase | 1-5 years | Yes (i) | The finance company, unless an optional final balloon payment is made | Yes |
Hire purchase | 1-5 years | Yes (i) | The finance company, until the final repayment is made | No |
Leasing/Personal Contract Hire | 1-4 years | Yes (i) | The finance company, at all times | Yes |
(i) In most circumstances, though sometimes you can get a deposit contribution from the dealer or structure a lease deal to pay nothing upfront.
So which wins?
Sadly, there is no one-size fits all answer to this (as much hangs on whether you want to own the car and other factors). However, we've included more information on each option below, to help work out which is right for you.
See which loans you've the best chance of getting, in your own personal best-buy table.
Usually, applying is the only way to know if you'll be accepted for a loan. Yet that marks your credit file, affecting your ability to get future credit. To help, our tool uses a 'soft search' to find your chances of acceptance before applying.
Check your chance of acceptance
Where can I get a loan?
If you're looking for a loan, check out the best buy rates below, though remember, the advertised rate isn't necessarily the one you'll be offered. Up to 49% of people accepted for the loan could be given a different – usually higher – interest rate.
The rate will also depend on your credit score, with the cheapest often for those with higher scores. See our Credit Scores guide for full information on how to check yours for free, including help and tips to boost it.
We list loans by 'bands' as the rate you could get differs depending on how much you want to borrow.
As we warn above, while you should only borrow what you NEED, a peculiar quirk means you can sometimes pay less by getting a slightly bigger loan. Rates of loans under £3,000 are the most expensive, so always check if it's actually cheaper to borrow slightly more.
Specialist Money Transfer credit cards are also far cheaper than the loans below, if you can repay the full balance over 12-18mths.
Cheapest loans £3,000 - £4,999
LENDER | REP APR (1-5 years or stated) |
CHECK ELIGIBILITY + APPLY |
---|---|---|
Important. Specialist Money Transfer credit cards are far cheaper than the loans below, provided you can get a credit limit big enough. | ||
Hastings Direct | 5.9% rep APR | Check eligibility |
Apply* | ||
Ratesetter | 7.8% rep APR | Check eligibility |
Apply* | ||
AA | 8.2% rep APR (AA members) 8.3% rep APR (Non-members) |
Check eligibility |
Apply* | ||
Post Office | 8.3% rep APR | Check eligibility |
Apply* | ||
Bank of Ireland | 8.4% rep APR | Check eligibility |
Apply* |
See all official APR examples.
Cheapest loans £5,000 - £7,499
LENDER | REP APR (1-5 years or stated) |
CHECK ELIGIBILITY + APPLY |
---|---|---|
Ratesetter | 2.8% rep APR | Check eligibility |
Apply* | ||
Virgin Money | 3.4% rep APR | Check eligibility |
Apply* | ||
Tesco Bank | 3.4% rep APR (1-3 years) |
Check eligibility |
Apply* | ||
MBNA | 3.5% rep APR | Check eligibility |
Apply* | ||
Hastings Direct | 3.5% rep APR | Check eligibility |
Apply* |
See all official APR examples.
Cheapest loans £7,500 - £15,000
LENDER | REP APR (1-5 years or stated) |
CHECK ELIGIBILITY + APPLY |
---|---|---|
Cahoot | 2.8% rep APR | Check eligibility |
Apply* | ||
Ratesetter | 2.8% rep APR | Check eligibility |
Apply* | ||
MBNA | 2.8% rep APR | Check eligibility |
Apply* | ||
Sainsbury's Bank | 2.8% rep APR (4-5 years) 2.9% rep APR (1-3 years) Must have had a Nectar card for 6mths+ |
Check eligibility |
Apply* | ||
M&S Bank | 2.9% rep APR (1-7 years) | Check eligibility |
Apply* |
See all official APR examples.
Cheapest loans £15,001 - £20,000
LENDER | REP APR (1-5 years or stated) |
CHECK ELIGIBILITY + APPLY |
---|---|---|
Cahoot | 2.8% rep APR | Check eligibility |
Apply* | ||
Ratesetter | 2.8% rep APR | Check eligibility |
Apply* | ||
Sainsbury's Bank | 2.8% rep APR (4-5 years) 2.9% rep APR (2-3 years) Must have had a Nectar card for 6mths+ |
Check eligibility |
Apply* | ||
Tesco Bank | 2.9% rep APR (1-3 years) | Check eligibility |
Apply* | ||
AA | 2.9% rep APR (AA members, 1-7 years) 3% rep APR (Non-members, 1-7 years) |
Check eligibility |
Apply* |
See all official APR examples.
Cheapest loans £20,001 - £25,000
LENDER | REP APR (1-5 years or stated) |
CHECK ELIGIBILITY + APPLY |
---|---|---|
Ratesetter | 2.8% rep APR | Check eligibility |
Apply* | ||
Sainsbury's Bank | 2.8% rep APR (4-5 years) 2.9% rep APR (2-3 years) 3% rep APR (6-7 years) Must have had a Nectar card for 6mths+ |
Check eligibility |
Apply* | ||
Tesco Bank | 2.9% rep APR (1-3 years) | Check eligibility |
Apply* | ||
AA | 2.9% rep APR (AA members, 1-7 years) 3% rep APR (Non-members, 1-7 years) |
Check eligibility |
Apply* | ||
Post Office | 3% rep APR (1-7 years) | Check eligibility |
Apply* |
See all official APR examples.
Important. Certain lenders offer personal loans up to £50,000, though it's a huge commitment, so think very carefully before getting such a large amount. Be VERY sure you can repay it.
If you do plan to borrow, first check with your own bank, as cheap rates for such large borrowing are often for existing customers only. If your bank can't help, next look at the cheapest open market rates.
Cheapest loans over £25,000
LENDER | REP APR (£25k-£35k, 1-5 years or stated) |
APPLY |
---|---|---|
First Direct |
£25k-£30k: 3.3% rep APR (1-7 years) | Existing Customers only Apply (not in eligibility calc) |
£30k-£50k: 6.7% rep APR (1-7 years) | ||
Halifax | 5.8% rep APR | Existing Customers only Apply (not in eligibility calc) |
Sainsbury's Bank | £25k-£30k: 6.2% rep APR (2-5 years) Must have had a Nectar card for 6mths+, sadly not open to anyone self-employed |
Check eligibility |
Apply* | ||
Virgin Money | 6.9% rep APR (1-7 years) | Apply (not in eligibility calc) |
See all official APR examples.
If the above doesn't work, you could combine smaller personal loans or remortgage, though that usually means extending the term, more interest and securing the debt on your house.
Personal loans Q&A

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