Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

The MoneySaving Forum: join to chat & swap tips with other MoneySavers. Learn how in the Forum Introduction Guide

Cheap Personal Loans

Borrow at 2.7% for £7.5k+

Get Our Free Money Tips Email!

For all the latest deals, guides and loopholes - join the 12m who get it. Don't miss out

Martin

Updated Daily

Man in a percentage sign

For those who need to borrow, now could be the best time to get a loan as rates are still hovering at or around all-time lows as providers battle for your custom. But be careful before picking a personal loan as even the best deals have more tricks than Dynamo's sleeve.

Borrowing should always be budgeted for, and carefully planned, so you know whether you can afford the repayments. This is a step-by-step guide, with regularly-updated best buys, a unique calculator to pare your costs to the bone and an eligibility calculator that'll tell you which loans you've the best chance of getting before you apply.

What is a personal loan?

Personal loans, also known as unsecured loans, are where you borrow a fixed amount from a lender, and agree to pay it back over a set time period paying fixed monthly repayments.

The lender will charge you interest as its fee to lend money to you, so you repay both the amount you borrowed plus interest. The advantage is that you get cash upfront, but are able to spread the cost of a purchase over several months or years.

This guide tells you the cheapest personal loans, but also addresses whether other finance options might be cheaper for you.

Credit cards can be cheaper than loans

An online loan application: acceptedPersonal loans let you borrow up to £50,000. The key sell's "structured repayments", so you know how long you're borrowing for and what it'll cost each month. Yet in general, borrowing on the cheapest credit cards substantially undercuts the cheapest loans; meaning in many circumstances, they should be used first.

But much depends on why you're getting a loan, and how much you want to borrow. We've spelled out the most common situations, and where you might want to think about a credit card instead of a loan.

When a credit card's better than a loan

The most important factor here is your credit limit. Credit cards won't usually give you more than £5,000, and that's provided that you have a good credit score. So if what you need to buy is more expensive, 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 to pay and can clear it in 30 months.

  • I can't pay directly on a credit card or I need longer than 30 months.

  • I'm trying to make existing debts cheaper.

But a credit card's not always the best option...

personal loans

Most credit cards won't give you a credit limit higher than £5,000, so if you want to borrow more, you might be better checking out the best buy loans below and using the Loans Eligibility Calculator, which tells you which loans you've the best chance of getting before you apply.

  • I'm trying to cut the cost of an existing loan.

  • I think I can get a loan from my employer.

Choosing the right loan

personal loans

Loans have never been as cheap as they are right now. A price war between competitive lenders means that rates have plummeted over the past couple of years, and despite a slight rise after the Bank of England's November 2017 base rate rise, lenders are once again battling for your custom.

Even low interest rate loans can have hidden costs, though. Before you apply, be aware of the following:

  • Borrow as little as possible, repay ASAP

  • Beware 'representative' rates - you may not get what's advertised

  • Will you be accepted?

Best Buys 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. Plus, if you want to find out which loans you'll get, without applying, use our eligibility calculator to see your chances.

The best buys are below, but there's the chance to undercut some of these rates by 0.5 percentage points if you're a Nationwide current account customer (or you successfully apply for one of their accounts). Read a full Nationwide how-to.

Cheapest loans under £5,000

Cheapest standard rate Lender and representative APRs (all rates over 1-5 years unless stated)
See all official APR examples
Check which loan you can get before you apply
Eligibility Calc. (MSE's free tool)

Usually the only way to know if you'll get a loan is to apply, which marks your credit file. Our Eligibility Calculator does a soft search to find which loans you'll get without harming your creditworthiness.

Cheapest loans for
£1,000 - £1,999

Want to find out if you'll get these loans? Use the Eligibility Calculator.

A few specialist credit cards can approximate loans and are far cheaper than the loans below, full step-by-step in Money Transfers.
RateSetter* 6.7% rep APR
CU Loans* 8.9% rep APR for £1,500-£1,999 (will find if there's a credit union you're eligible for)
Zopa* 9.5% rep APR (1 year term)
Zopa* 9.9% rep APR (2-5 years)
Asda Money 9.9% rep APR (will search various lenders and tell you the rate you'll get before you apply, not in eligibility calc)
Cheapest loans for
£2,000 - £2,999

Want to find out if you'll get these loans? Use the Eligibility Calculator.

A few specialist credit cards can approximate loans and are far cheaper than the loans below, full step-by-step in Money Transfers.
RateSetter* 6.7% rep APR
Zopa* 6.9% to 7.9% rep APR (depending on amount & term)

Ikano Bank 7.8% rep APR (not in eligibility calc)

CU Loans* 8.9% rep APR (will find if there's a credit union you're eligible for)
Cheapest loans for
£3,000 - £4,999

Want to find out if you'll get these loans? Use the Eligibility Calculator.

Zopa* 5% to 6.9% rep APR (depending on amount & term)
Admiral* 6.7% rep APR

RateSetter* 6.7% rep APR

Ikano Bank 7.7% rep APR (not in eligibility calc)

Cheapest loans from £5,000 to £15,000

Cheapest standard rate Lender and Representative APRs (all rates over 1-5 years unless stated)
See all official APR examples
Check which loan you can get before you apply
Eligibility Calc (MSE's free tool)

Usually the only way to know if you'll get a loan is to apply, which marks your credit file. Our Eligibility Calculator does a soft search to find which loans you'll get without harming your creditworthiness.

Cheapest loans for
£5,000 - £7,499

Want to find out if you'll get these loans? Use the Eligibility Calculator.

New. Sainsbury's Bank* 3.2% rep APR (Nectar cardholders only, 1-3 years)
New. Sainsbury's Bank* 3.3% rep APR (Nectar cardholders only, 37mths-5 years)
Zopa* 3.4% rep APR
Admiral* 3.5% rep APR
Hitachi* 3.5% rep APR (2-5 years)

M&S Bank* 3.6% rep APR (1-7 years)

John Lewis Finance* 3.6% rep APR
Cheapest loans for
£7,500 - £15,000

Want to find out if you'll get these loans? Use the Eligibility Calculator.

Sainsbury's Bank* 2.7% rep APR (Nectar cardholders only, 1-3 years)
Sainsbury's Bank* 2.8% rep APR (Nectar cardholders only, 37mths-5 years)
Cahoot* 2.8% rep APR
M&S Bank* 2.8% rep APR (1-3 years)
M&S Bank* 2.9% rep APR (37 months - 7 years)

Yorkshire* / Clydesdale* 2.9% rep APR (1-7 years)

John Lewis Finance* 2.9% rep APR
Zopa* 2.9% rep APR

Cheapest loans over £15,000

Cheapest standard rate Lender and Representative APRs (all rates over 1-5 years unless stated)
See all official APR examples
Check which loan you can get before you apply
Eligibility Calc (MSE's free tool)

Usually the only way to know if you'll get a loan is to apply, which marks your credit file. Our Eligibility Calculator does a soft search to find which loans you'll get without harming your creditworthiness.

Cheapest loans for
£15,001 - £19,999

Want to find out if you'll get these loans? Use the Eligibility Calculator.

Sainsbury's Bank* 2.7% rep APR (Nectar cardholders only, 2-3 years)
Sainsbury's Bank* 2.8% rep APR (Nectar cardholders only, 37 months - 7 years)
Cahoot* 2.8% rep APR
M&S Bank* 2.8% rep APR (1-3 years)
M&S Bank* 2.9% rep APR (37 months - 7 years)

Yorkshire* / Clydesdale* 3% rep APR (1-7 years)

Tesco Bank* 3% rep APR
The AA* 3% rep APR (AA members only, 1-7 years)
The AA* 3.1% rep APR (1-7 years)
Cheapest loans for
£20,000 - £25,000

Want to find out if you'll get these loans? Use the Eligibility Calculator.

Sainsbury's Bank* 2.8% rep APR (Nectar cardholders only, 2-3 years)
Sainsbury's Bank* 2.9% rep APR (Nectar cardholders only, 37mths-7 years)

Yorkshire* / Clydesdale* 3% rep APR (1-7 years)

Tesco Bank* 3% rep APR
The AA* 3% rep APR (AA members only, 1-7 years)
The AA* 3.1% rep APR (1-7 years)
Post Office* 3.1% rep APR (1-7 years)
Zopa* 3.1% rep APR
Cheapest loans
over £25,000

Want to find out if you'll get these loans? Use the Eligibility Calculator.

Must have a First Direct current account First Direct 3.3% rep APR (loans between £25,000 and £30,000, 1-7 years, not in eligibility calc)
Must have a First Direct current account First Direct 6.7% rep APR (loans between £30,001 and £50,000, 1-7 years, not in eligibility calc)
Tesco Bank* 6.8% rep APR

Yorkshire* / Clydesdale* 6.9% rep APR

Sainsbury's Bank* 6.9% rep APR (Nectar cardholders only, 2-3 years)

First Direct now offers personal loans to its current account customers up to £50,000 and Sainsbury's Bank offers loans up to £40,000. Tesco Bank, Yorkshire Bank and Clydesdale offer up to £35,000. Though be very careful in getting a personal loan for such a large amount as it's a huge commitment.

If you can't get this, you could combine loans, or remortgage, though that often means extending the term, more interest and securing the debt on your house.

Special trick for Nationwide customers – 2.2% loans?

If you hold a current account (or successfully apply for one) with Nationwide, it promises to undercut the best loan offer you get by 0.5 percentage points - as long as you're accepted for its own loan. This means, for example, a 2.7% loan (the current best buy) could become 2.2%...

Full details of how the Nationwide loan trick works

It might be cheaper to borrow more

personal loans

It's worth being aware of this when borrowing close to one of the rate boundaries above – which are set by lenders.

If you wanted to borrow £4,900 over five years, the cheapest loan's 6.7%, meaning a total repayment of £5,780 (£880 interest). Yet borrow £5,000 and the rate drops to 3.4%, which means total repayments are £5,444 (£444 interest) - that's £336 LESS, even though you borrowed £100 more.

Therefore best buy loan tables are wrong, as the cheapest loan for £4,600+ is to borrow £5,000. If you're borrowing near a threshold, use a loans calculator to check if borrowing more costs less. If you do borrow more, put the extra loan towards repayments.

Want more loan options?

These cheapest loans are updated every week. If you want to see a list of many available loans then online loan comparisons such as Moneyfacts and MoneySupermarket* give a wider range, though may miss some of the cheapest options above.

Cashback sites may pay you for signing up

As an extra boon, members of specialist cashback websites can be paid when they sign up to some financial products. Do check that it's exactly the same deal though, as terms can be different. And remember the cashback is never 100% guaranteed until it's in your account. 

Full help to take advantage of this and pros & cons in our Top Cashback Sites guide.

Can I repay my loan early?

A percentage sign smiley One of the main ways to add flexibility used to be via the Cheap Credit Card Loans loophole, which allows total flexibility and has rates cheaper than loans. But it's only for the financially savvy as it's easy to mess up.

However, if you're considering either substantially overpaying or clearing your debt early with a lump sum, there are some options.

  • Early part-repayments are allowed

  • Full early repayment

  • Higher credit scorers earning £12,000 plus

Peer-to-peer lending

personal loans

It sounds funky and different. But for borrowers, getting a peer-to-peer loan is pretty similar to a bank loan, except rates can be cheaper and they're flexible, so you can repay when you want.

These loans from the two biggies, Zopa* and Ratesetter*, tend to be especially competitive if you have a reasonable credit score and are borrowing smaller amounts.

  • What is peer-to-peer lending?

  • How cheap are they?

  • Do initial applications hit my credit score?

  • What are flexible repayments?

  • Is it safe?

Cheap, easier-to-obtain loans

Let us be blunt. Although there are plenty of competitive rates now available, getting the cheapest ones can still be difficult.

First, treble-check you're borrowing the absolute minimum needed. Lower amounts are easier to borrow. Plus, make sure you've checked your credit files to ensure a simple error isn't hitting your creditworthiness (read the Credit Rating guide).

After that, there are three main options:

  • Use the MSE Loans Eligibility Calculator.

  • Check out your own bank.

  • Consider a credit union loan.

If no one will lend you the money cheaply, it's usually best not to borrow at all. If the idea of the loan was to cut the cost of existing debts, please read the Problem Debt Help guide.

Cheapest loans with PPI

Payment protection insurance (PPI) is supposed to cover you in the event of accident, sickness or unemployment for 12 or 24 months. If you have no other funds, wouldn't be covered by work-based benefits, and don't have any other insurance policies that would cover your repayments for a year, then getting a policy may be a sensible move for you.

Let's start by saying this as loud as we can….

Get PPI from the loan company and you'll almost always pay many times more than needed, often wasting £1,000s.

If you already have PPI on a loan, you may want to take a look at the PPI Reclaiming guide.

How to get the cheapest insured loan

  1. Apply for the cheapest uninsured loan.

    Simply use the uninsured loan list above to find the right lender.

  2. Analyse your PPI requirements.

    While most PPI cover is pretty similar, they're not identical. It's worth working out what you need before you start. For example, if you're not working, then you want to only get accident and sickness, not unemployment cover. If you're self-employed, some policies won't cover you, so either choose one that does or just opt for accident and sickness.

  3. Use the cheapest standalone insurer.

    There's a growing industry of small insurers looking to provide reasonable cover that vastly undercuts the banks' own. These include JustClick4Cover, Paymentcare* and iProtect.

If you're really set on just getting the loan and insurance together for the convenience, then never compare using the interest rate, but ask "what's the total cost, including insurance?".

personal loans

The Loan Calculator

We've designed a unique calculator to help you work out the cost of a loan, plus whether you can save by switching. Unfortunately, this does not work on a mobile so email the guide to yourself so you can have a look at it on your desktop.

Go to the personal loans calculator

Use the calculator below to play around and find out what shortening or lengthening the loan does...

The Loan Calculator

We've designed a unique calculator to help you work out the cost of a loan, plus whether you can save by switching.

Personal Loans Calculator

Pick your question...
How much do you want to borrow? £

What's the annual interest rate (APR)? % This is the cost of your loan. To help you calculate, best buy APRs for common loan amounts include:
£1,000-£1,999: 8% to 20%
£2,000-£2,999: 8% to 19%
£3,000-£4,999: 8% to 13%
£5,000-£7,499: 3.6% to 9%
£7,500-£15,000: 2.9% to 7%
£15,001-£25,000: 3.2% to 8%


How long do you want to borrow for? months You can usually choose to borrow over 12 to 60 months (1 to 5 years). If you choose a shorter loan, you'll have a higher monthly payment, but will pay less in interest. A longer loan generally means a lower monthly repayment, but you'll pay more in interest as you're borrowing over a longer period of time.





Just want to see the best buys?

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 not...

Free tool if you're having problems

Man complainingThis tool helps you draft your complaint and manage it too. It's totally free, and offered by a firm called Resolver, which we like so much we work with it to help people get complaints justice.

If the complaint isn't resolved, you can use Resolver to escalate it to the free Financial Ombudsman Service.

FAQs

  • Should I get a consolidation loan?

  • What's the difference between secured and unsecured loans?

  • What if I need to borrow more than they'll lend?

  • What will happen if UK interest rates change?

  • Will the credit crunch affect loan rates?

  • How quickly will I get the money?

  • What is a homeowner loan?

  • Are car loans straight from the dealer worth it?

Get Our Free Money Tips Email!

For all the latest deals, guides and loopholes - join the 12m who get it. Don't miss out