Couple at home applying for personal loan

Cheap Personal Loans

Borrow at 2.8% for £7.5k+

Updated Daily

Coronavirus financial worries have caused some lenders to pause new loan applications and almost all have tightened acceptance criteria. Yet there are still low rates available, so if you NEED to borrow, our guide has full info on what to watch out for and a list of best buys. Plus, our Loans Eligibility Calculator helps you find which lenders are most likely to accept you.

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.

This guide details the cheapest personal loans, but also addresses whether other finance options, like credit cards, might be cheaper for you. Plus, we've our clever Loans Eligibility Calculator, which can tell you which lenders are likely to accept you before you apply.

The eight need-to-knows

1. Only borrow if it's needed, planned and you've budgeted to pay it back. Even then, borrow as little as possible and repay as quickly as possible

The formula's simple: borrow as little as possible, repay as quickly as possible. To avoid complications, always base your borrowing on what you can comfortably afford to repay (preferably after doing a budget), as borrowing too much can cause debts to spiral out of control.

And beware – while borrowing over a longer period spreads the debt and decreases monthly repayments, it massively increases the interest you'll repay. Borrow £10,000 at 7% over three years and the interest cost is £1,100. Borrow the same over 10 years, and you'll pay a massive £3,900 in interest.
2. 'Credit card loans' can be cheaper if you're borrowing less than £5,000 – though you'll need to be disciplined to pay it back
Before jumping straight into a loan, first consider if you could get a credit card for a smaller amount. The most important factor here, however, is your credit limit. Unless you've a large income and a good credit score, credit cards won't usually give you more than £3,000-£5,000. So if what you need to buy's more expensive than this, you're probably better off looking for a £5,000+ loan.

But if you can buy whatever it is for £5,000 or less, you have several other options. See if any of these scenarios fit you...

I can use a credit card and can clear it in 27 months. You can get up to 27 months at 0% interest on purchases on a credit card – only useful if you can budget to pay off your debt in that time, or you're super-organised and can balance-transfer the debt to another card before the 0% period ends.

This technique's also only useful if the retailer takes credit cards. And some – most notably car dealerships – often don't. But there's still a way to use a card to beat a loan...

I can't pay directly on a credit card. Don't worry, even if you can't pay the retailer directly on a credit card, you can still pay by card, it's just slightly more complex.

You'll need a specialist money transfer card. These work by transferring cash from the new card to your bank account, so instead you owe the card (though there is a fee). Once there, you can spend it as you would a loan.

The longest deal at the moment is a card which gives you a 0% period of up to 24 months (with a 2.99-3.49% fee). If you can pay the debt off in that time, or balance-transfer it once the 0% is over, this could be a good replacement for a loan.

I'm trying to make existing card debts cheaper. In most cases, a loan won't be cheapest. Credit-card balance-transfer deals are designed to allow you to shift other cards' debts to them at a special cheap rate, usually much cheaper than the best loan rates.

This doesn't mean you need to keep shifting debts between short-term 0% deals. Some cheap deals (about 6% APR) last until ALL the debt is repaid – and beyond (see Best Balance Transfers guide).

With all these techniques, make sure you recreate the rigidity of paying off a loan. Work out how much you need to pay off each month to clear the card within the 0% period, then set up a direct debit for that amount each month. This way you're not tempted to skip months and end up owing debt at the end of the 0% (unless you're happy to keep rolling the debt on to new balance transfer cards each time).
3. Use our eligibility calculator to find which loans you're most likely to get

Usually, the only way to know if you'll be accepted is to apply, but each application marks your credit report for up to a year. This could make it harder for you to get credit in future. To help you minimise applications, our Loans Eligibility Calculator quickly shows your odds of getting almost every top loan listed below (plus many more) so you can find the ones most likely to accept you before applying.

How does the eligibility calculator work?

It uses a 'soft search', which is one you'll see on your credit report but lenders usually don't (and where they do they can't use the info), to give us an indication of your creditworthiness. We then match this against lenders' criteria for acceptance so we can show you the odds of getting each loan.

Knowing where you're more likely to be accepted, you'll be able to make a smarter application. Rejection's therefore much less likely, minimising the need to apply elsewhere, which would add another mark on your credit report.

Or join our Credit Club for a full credit health check

The MSE Credit Club shows your free Experian Credit Report and Credit Score, your Affordability Score, which helps you work out how much you can afford to borrow and is broken out for loans in particular, your Credit Hit Rate – which shows your chances of success, as a percentage, of grabbing top cards and loans – and much more.
4. Credit history's important, but income guides how much you can borrow
The ideal loan customer for a lender is someone with a good credit history (a proven track record of paying credit back on time) and a high level of disposable income.

Yet your credit history and your income are doing two different jobs in the lender's scorecard. We break it down here...

Credit history. Your credit record counts towards whether the lender will be willing to lend to you in the first place. But crucially it also contributes to the rate it's likely to offer you. A good credit record will make it more likely you'll get the advertised rate; if your credit history's poorer, it's likely you'll still get the loan, but you'll be repriced to a higher rate, as you're a bigger risk for the lender.

Income. Your disposable income dictates how much a lender will be willing to lend. This is worked out based on your income, minus rent or mortgage payments (and other outgoings that the lender estimates 'someone like you' would have, based on where you live and your number of dependants). And while you may have a perfect credit record, if your disposable income's not high enough (or not estimated to be high enough), you won't get the loan.

Our Loans Eligibility Calculator and Credit Club mimic these criteria when they're working out your loan chances. Credit Club also drills in to your affordability for loans and gives you a score ranging from 'poor' to 'very good' based on this.
5. 'Representative' APRs mean you might not get the advertised interest rate (especially if you've a poorer credit score)

There's a catch to watch out for. Some loan firms give those with lesser credit histories a higher APR than the one they advertise. You could, say, apply for a 3.2% loan, be accepted, but be given a 6.9% APR. This is because advertised loan APRs are 'representative' – meaning only 51% of successful applicants have to get them. So up to 49% may end up with a more expensive loan than they applied for (if they get accepted at all).

Some providers in our eligibility calculator will show the rate you're likely to get, though not all. We're working to get more that will though until then, sadly the only real way to find out whether you'll get the advertised rate is to apply.
6. Bizarrely it sometimes costs less to borrow more – but be careful

While generally you should try to minimise borrowing, a peculiar quirk means with loans sometimes you pay less by getting a slightly bigger loan. This happens because rates decrease at set thresholds.

For example, if you wanted to borrow £4,900 over 5yrs, the cheapest loan is 8.2%, so in total you repay £5,990. Yet borrow £5,000 and as the rate drops to 3.2%, the total repayment is £5,417 – that's £573 LESS repaid even though you borrowed £100 more.

So if you're borrowing close to a threshold (£2,000, £3,000, £5,000 or £7,500) use our Loan Cost Calc to see if you're better off borrowing a tad more (assuming you're accepted for the advertised rate). You could even use the 'extra' cash towards your first loan repayment(s).
7. You can usually overpay or settle your loan early for free

Loan providers must allow you to pay off your loan in full. This is sometimes subject to a penalty which is usually between one and two months' interest. Check your individual agreement to see what your lender will charge you.

If your loan was taken out on or after 1 February 2011, you can make partial overpayments on your loan. If your extra repayments total under £8,000 in a year, banks are not allowed to charge you a fee for making an overpayment. But if your overpayments total over £8,000 in a year then the bank is allowed to charge you so long as it has incurred a cost itself from you paying back the loan early.
8. Sub-prime loans – why we don’t cover them

We know a lot of you look for these loans that are for people with poorer credit histories, but they are hugely expensive and people can find themselves stuck in a high-cost debt spiral.

It's best you see if you can get a standard loan first by checking our Loans Eligibility Calculator, as you never know. Just enter your details and it'll show you which standard loans you're most likely to get – if any – without damaging your credit score. Some other eligibility checkers also include loans with eye-watering interest rates, so you could end up with a sub-prime loan without realising.

But remember, if you can only get a sub-prime loan, ask yourself, can you really afford it and do you really need it? If in doubt, don't get one. If you're struggling with debt, see our Debt Help guide. Plus also see how to Boost your credit score.

Loans Eligibility Calculator

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

Best-buy personal loans

If you're looking for a loan, check out the best-buy rates below. We list loans by 'bands' as the rate you could get differs depending on how much you want to borrow.

Cheapest loans under £3,000

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 £1,000 - £1,999: from 12.3%

LENDER	REP APR (1-5 years)	CHECK ELIGIBILITY + APPLY
Important. Specialist Money Transfer credit cards are far cheaper than the loans below.
AIB (NI)	12.3% rep APR	Newbies must apply by phone (not in eligibility calc)
Cahoot	13.5% rep APR	Check eligibility
Cahoot	13.5% rep APR	Apply*
Santander	13.5% rep APR	Check eligibility
Santander	13.5% rep APR	Apply*

See all official APR examples.

Cheapest loans £2,000 - £2,999: from 12.3%

LENDER	REP APR (1-5 years)	CHECK ELIGIBILITY + APPLY
Important. Specialist Money Transfer credit cards are far cheaper than the loans below.
AIB (NI)	12.3% rep APR	Newbies must apply by phone (not in eligibility calc)
Hitachi	13.4% rep APR (£2,500-£2,999 only, 2-5 years)	Check eligibility
Hitachi	13.4% rep APR (£2,500-£2,999 only, 2-5 years)	Apply*
Cahoot	13.5% rep APR	Check eligibility
Cahoot	13.5% rep APR	Apply*

See all official APR examples.

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.
Hitachi	8.4% rep APR (2-5 years)	Check eligibility
Hitachi	8.4% rep APR (2-5 years)	Apply*
Tesco Bank	8.5% rep APR (1-7 years)	Apply (not in eligibility calc)
AA	8.8% rep APR (AA members) 8.9% rep APR (Non-members)	Check eligibility
AA	8.8% rep APR (AA members) 8.9% rep APR (Non-members)	Apply*
MBNA	8.9% rep APR	Check eligibility
MBNA	8.9% rep APR	Apply*
Post Office	8.9% rep APR	Check eligibility
Post Office	8.9% rep APR	Apply*

See all official APR examples.

Cheapest loans £5,000 - £7,499

LENDER	REP APR (1-5 years or stated)	CHECK ELIGIBILITY + APPLY
Tesco Bank	3.4% rep APR (1-3 years)	Apply (not in eligibility calc)
MBNA	3.5% rep APR	Check eligibility
MBNA	3.5% rep APR	Apply*
John Lewis	3.6% rep APR	Apply (not in eligibility calc)
Cahoot	3.8% rep APR	Check eligibility
Cahoot	3.8% rep APR	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
Cahoot	2.8% rep APR	Apply*
TSB	2.8% rep APR	Check eligibility
TSB	2.8% rep APR	Apply*
M&S Bank (i)	2.9% rep APR (1-7 years)	Check eligibility
MBNA	2.9% rep APR	Check eligibility
MBNA	2.9% rep APR	Apply*

See all official APR examples. (i) Important: M&S Bank has asked we direct people to our eligibility calculator, so only those more likely to be accepted will actually apply, reducing demand and enquiry calls, as it's already over capacity and needs to prioritise coronavirus help for vulnerable people.

Cheapest loans £15,001 - £20,000

LENDER	REP APR (1-5 years or stated)	CHECK ELIGIBILITY + APPLY
Cahoot	2.8% rep APR	Check eligibility
Cahoot	2.8% rep APR	Apply*
TSB	2.8% rep APR	Check eligibility
TSB	2.8% rep APR	Apply*
Tesco Bank	2.9% rep APR (1-3 years)	Apply (not in eligibility calc)
MBNA	3% rep APR	Check eligibility
MBNA	3% rep APR	Apply*

See all official APR examples.

Cheapest loans £20,001 - £25,000

LENDER	REP APR (1-5 years or stated)	CHECK ELIGIBILITY + APPLY
TSB	2.8% rep APR	Check eligibility
TSB	2.8% rep APR	Apply*
Tesco Bank	2.9% rep APR (1-3 years)	Apply (not in eligibility calc)
MBNA	3% rep APR	Check eligibility
MBNA	3% rep APR	Apply*
Virgin Money	3.2% rep APR (1-7 years)	Apply (not in eligibility calc)

See all official APR examples.

Cheapest loans over £25,000

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.

LENDER	REP APR (£25k-£35k, 1-5 yrs or stated)	APPLY
First Direct	£25k-£30k: 3.3% rep APR (1-7 years)	Existing Customers only Apply (not in eligibility calc)
First Direct	£30k-£50k: 6.7% rep APR (1-7 years)	Existing Customers only Apply (not in eligibility calc)
Halifax	5.8% rep APR	Existing Customers only Apply (not in eligibility calc)
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.

Coronavirus help if you're struggling

If you're struggling to pay an existing loan due to coronavirus, your provider should give you a payment holiday of up to three months, or offer an alternative way to help.

DON'T just stop paying – you must arrange a break with your lender first (you've until 31 October to request it). Provided you've agreed it with your lender, these payment holidays then can't hurt your creditworthiness and won't come with any penalties or charges.

You'll still be charged interest during the payment holiday though, so will likely pay more overall. It's therefore best to only do this if you need to – if you can afford to pay, it's better to keep doing so.

If you have a loan from a peer-to-peer lender, such as Zopa or Ratesetter, the measures above don't currently apply, so it's down to each company to determine the help it offers. See our lender-by-lender loans help for the latest updates, full information and how to apply.

Want to complain about your loan provider?

If your loan provider has charged you the wrong amount, taken the wrong amount in payment, or its service has been atrocious, then you don't have to suffer in silence. It's always worth trying to call your lender first to see if it can help, but if it can't (or won't), or it doesn't get back to you...

Free tool to help you complain

This tool helps you draft and manage your complaint. It's totally free to use, and it's offered by Resolver, a firm we work with to help people get complaints justice.

RESOLVER – FREE COMPLAINTS TOOL*

If the company you're complaining to won't help, the Resolver tool also helps you escalate your complaint to the free Financial Ombudsman Service.

Personal Loans Q&A

Join the MSE Forum Discussion

Chaep Personal Loans

What the * means above

If a link has an * by it, that means it is an affiliated link and therefore it helps MoneySavingExpert stay free to use, as it is tracked to us. If you go through it, it can sometimes result in a payment or benefit to the site. It's worth noting this means the third party used may be named on any credit agreements.

You shouldn’t notice any difference and the link will never negatively impact the product. Plus the editorial line (the things we write) is NEVER impacted by these links. We aim to look at all available products. If it isn't possible to get an affiliate link for the top deal, it is still included in exactly the same way, just with a non-paying link. For more details, read How This Site Is Financed.

Duplicate links of the * links above for the sake of transparency, but this version doesn't help MoneySavingExpert.com:

AA, Cahoot, Hitachi, M&S Bank, MBNA, Post Office, Santander, TSB, Zopa

MoneySupermarket.com Financial Group Limited is authorised and regulated by the Financial Conduct Authority (FRN: 303190). The registered office address of both MoneySupermarket.com Group PLC and MoneySupermarket.com Financial Group Limited (registered in England No. 3157344) is MoneySupermarket House, St. David's Park, Ewloe, Chester, CH5 3UZ. MoneySavingExpert.com Limited is an appointed representative of MoneySupermarket.com Financial Group Limited.