If I come into a windfall, should I pay the loan off?

A standard MoneySaving rule of thumb is always pay off any debts before stashing any money in savings (read Pay off Debts with Savings ). In general, this is true with loans too, though due to the repayment penalties you may be financially better off by sticking it in a high interest account and drip-feeding loan payments out of there. So if the 'total repayment' figure of your loan is £5,000, yet to keep repaying it each month costs £5,100 in total, you only gain £100 by paying it off now. Stashing the loan repayments in a top savings account could earn you more (see Top Savings for the top picks). However, if in doubt of the calculations, always err on the side of clearing your debts.

Can I cut my loan costs even further?

You may be able to if you have a relatively small loan. Credit cards are a much cheaper way to borrow than loans; short-ish term borrowing at an equivalent 2%ish APR is possible. Yet if you already have a loan, shifting it to a credit card isn't an easy operation. It is possible, although tricky, to do it though. Only attempt it if you've got a good credit score and, more importantly, are very money-savvy. You can find full details in the Money Transfers guide.

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

Once you've applied for the loan, it's already marked as a 'hard search' on your credit report. So assuming you applied for the cheapest loan for you, then there's no point in not accepting that cash because it's not the money you need. The answer's relatively simple – just apply for another loan to fill the gap. If you haven't been turned down due to a credit score issue, this isn't likely to be too difficult. Just ensure both loans are still saving you money. If not, use the first to partially pay off the second – every little helps!

What will happen if UK interest rates change?

Almost every personal loan is at a fixed rate, so the rate and repayments you are given at the outset are fixed over the life of the loan, regardless of what happens to the base rate. Thus there's no impact whatsoever, whether rates rise or fall. But a change in the base rate will affect those looking to get a new loan, although it's not an exact relationship. As loans are borrowed over the long term, the rates lenders set depend more on the City's predictions of long-term interest rates rather than the actual UK base rate.

How quickly will I get the money?

That depends on the lender. There are some which will give you the cash instantly (or at least on the same day) if they accept you.

Cut existing loan costs

Free calculator shows if you'll save by switching loans

Helen Saxon

Updated 23 March 2021

Coronavirus financial worries have caused some lenders to tighten their loan acceptance criteria. But low rates are still available for many, so cutting the cost of your existing loan is still possible. This guide will show you how to find the best new deal, and features a unique loan-switching calculator so you can see if you can cut your costs.

Please note: This article is about unsecured loans, ie, the type sold by most high-street lenders. The issues surrounding secured loans (where your home may be at risk) are even more complex. So this article is a secured loan-free zone.

How to cut existing loan costs, step-by-step

Here we'll take you through the three key steps to calculate how much you could save by effectively switching loans – using a new, cheaper loan to repay your existing, more costly one.

Step 1: Find out your settlement figure

Before checking if you can save, you'll need to know the following information:

How much it would cost to pay off your loan right now
What your exact monthly payments are
How long your loan has left to go

The first is how much you'd need to borrow on a new loan to clear the existing one. It's the full debt plus any early settlement penalty charge (the maximum fee is two months' interest). This is called the settlement figure – you'll usually need to call your lender to get this.

Step 2: Find YOUR new top loan rate

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

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.

Though, beware, all the top loans compared below and most in the eligibility checker are representative rates (some providers show guaranteed rates - we're working on adding more). This means only 51% of those accepted actually need to be given these rates. Depending on your credit score, you may pay a lot more.

Under £3,000: from 9.9% APR
£3,000 - £4,999: from 5.9% APR
£5,000 - £7,499: from 2.8% APR

£7,500 - £20,000: from 2.8% APR
£20,001 - £25,000: from 2.8% APR
Over £25,000: from 3.3% APR

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*
Tesco	13.5% rep APR (1-3yrs)	Check eligibility
Tesco	13.5% rep APR (1-3yrs)	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*
Santander	13.5% rep APR	Check eligibility
Santander		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.
Ratesetter	7.8% rep APR	Check eligibility
Ratesetter	7.8% rep APR	Apply*
AA	8.2% rep APR (AA members) 8.3% rep APR (Non-members)	Check eligibility
AA	8.2% rep APR (AA members) 8.3% rep APR (Non-members)	Apply*
Post Office	8.3% rep APR	Check eligibility
Post Office	8.3% rep APR	Apply*
Bank of Ireland	8.4% rep APR	Check eligibility
Bank of Ireland	8.4% 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
Ratesetter	2.8% rep APR	Check eligibility
Ratesetter	2.8% rep APR	Apply*
Sainsbury's Bank	3.3% rep APR Must have had a Nectar card for 6mths+	Check eligibility
Sainsbury's Bank	3.3% rep APR Must have had a Nectar card for 6mths+	Apply*
Virgin Money	3.4% rep APR	Check eligibility
Virgin Money	3.4% rep APR	Apply*
Tesco Bank	3.4% rep APR (1-3 years)	Check eligibility
Tesco Bank	3.4% rep APR (1-3 years)	Apply*
MBNA	3.5% rep APR	Check eligibility
MBNA	3.5% 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*
Ratesetter	2.8% rep APR	Check eligibility
Ratesetter	2.8% rep APR	Apply*
MBNA	2.8% rep APR	Check eligibility
MBNA	2.8% rep APR	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
Sainsbury's Bank		Apply*
M&S Bank	2.9% rep APR (1-7 years)	Check eligibility
M&S Bank	2.9% rep APR (1-7 years)	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
Cahoot	2.8% rep APR	Apply*
Ratesetter	2.8% rep APR	Check eligibility
Ratesetter	2.8% rep APR	Apply*
MBNA	2.8% rep APR	Check eligibility
MBNA	2.8% rep APR	Apply*
AA	2.8% rep APR (members, 1-7 years) 2.9% rep APR (non-members, 1-7 years)	Check eligibility
AA		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
Sainsbury's Bank		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
Ratesetter	2.8% rep APR	Apply*
MBNA	2.8% rep APR	Check eligibility
MBNA	2.8% rep APR	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
Sainsbury's Bank		Apply*
AA	2.8% rep APR (AA members, 1-7 years) 2.9% rep APR (Non-members, 1-7 years)	Check eligibility
AA		Apply*
Post Office	2.9% rep APR (1-7 years)	Check eligibility
Post Office	2.9% rep APR (1-7 years)	Apply*

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.

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)
First Direct	£30k-£50k: 6.7% rep APR (1-7 years)	Existing Customers only Apply (not in eligibility calc)
Sainsbury's Bank	£25k-£30k: 5.7% rep APR (4-5 years) £25k-£30k: 6.2% rep APR (2-3 years) Must have had a Nectar card for 6mths+, sadly not open to anyone self-employed	Check eligibility
Sainsbury's Bank		Apply*
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.

Step 3: The BIG reveal – check if you can save

Plug the old and new loan details into our nifty loan-switching calculator. If you can save, apply. If accepted, use the new loan to pay off the old one (note the calculator assumes you will borrow the new amount over the same remaining number of months).

Coronavirus help if you're struggling to repay an existing loan

If you're struggling to pay an existing loan due to coronavirus, lenders should provide support. Yet the blanket payment holiday help that used to be available has ended.

So, if you're struggling to pay your loan now, or you're coming off an agreed payment holiday, lenders are now supposed to provide 'tailored support'. Under this, you could be offered a (further) payment holiday or a period of reduced payments, reduced interest or a repayment plan – lenders should take into account how much you can afford and how your finances are likely to change in the near future.

Providers are expected to report any support they give you to credit reference agencies, which could affect your future creditworthiness. Yet don't let that put you off from contacting your provider – missing payments or defaulting is likely to have a far worse impact.

For the latest updates and full information on the support available, see our Coronavirus Finance & Bills Help guide.

Q&A: Cutting loan costs

If I come into a windfall, should I pay the loan off?

A standard MoneySaving rule of thumb is always pay off any debts before stashing any money in savings (read Pay off Debts with Savings). In general, this is true with loans too, though due to the repayment penalties you may be financially better off by sticking it in a high interest account and drip-feeding loan payments out of there.

So if the 'total repayment' figure of your loan is £5,000, yet to keep repaying it each month costs £5,100 in total, you only gain £100 by paying it off now. Stashing the loan repayments in a top savings account could earn you more (see Top Savings for the top picks). However, if in doubt of the calculations, always err on the side of clearing your debts.
Can I cut my loan costs even further?

You may be able to if you have a relatively small loan.

Credit cards are a much cheaper way to borrow than loans; short-ish term borrowing at an equivalent 2%ish APR is possible. Yet if you already have a loan, shifting it to a credit card isn't an easy operation. It is possible, although tricky, to do it though.

Only attempt it if you've got a good credit score and, more importantly, are very money-savvy. You can find full details in the Money Transfers guide.
What if I need to borrow more than they'll lend?

Once you've applied for the loan, it's already marked as a 'hard search' on your credit report. So assuming you applied for the cheapest loan for you, then there's no point in not accepting that cash because it's not the money you need. The answer's relatively simple – just apply for another loan to fill the gap. If you haven't been turned down due to a credit score issue, this isn't likely to be too difficult.

Just ensure both loans are still saving you money. If not, use the first to partially pay off the second – every little helps!
What will happen if UK interest rates change?

Almost every personal loan is at a fixed rate, so the rate and repayments you are given at the outset are fixed over the life of the loan, regardless of what happens to the base rate. Thus there's no impact whatsoever, whether rates rise or fall.

But a change in the base rate will affect those looking to get a new loan, although it's not an exact relationship. As loans are borrowed over the long term, the rates lenders set depend more on the City's predictions of long-term interest rates rather than the actual UK base rate.
How quickly will I get the money?

That depends on the lender. There are some which will give you the cash instantly (or at least on the same day) if they accept you.

MSE Forum

Have your say in our forum!

Cut Existing Loan Costs

Spotted out of date info/broken links? Email: brokenlink@moneysavingexpert.com

Tesco Bank to close all existing current accounts in November – here's what it means for its 213,000 customers

26 July 2021

Tesco Bank has announced it will close all existing current accounts on 30 November, with around 213,000 customers affected.
App-based Starling and Monzo top MSE's latest banking service poll – see how your bank fared

23 July 2021

Challenger bank Starling has taken the crown in our latest banking customer service poll, with digital rival Monzo coming a close second and former champion First Direct knocked into third place.
Energy price cap could be extended beyond 2023 and households given personalised switching advice under new Government plans

23 July 2021

The energy price cap, which limits how much suppliers can charge households on poor value standard variable tariffs (SVTs), could be extended beyond 2023, while households on those tariffs will be given personalised switching advice, under new plans announced by the Government today.
Martin Lewis explains the financial help you can get if you've been 'pinged' and told to self-isolate by the Covid app or NHS Test & Trace

22 July 2021

Over 600,000 people in England and Wales were 'pinged' and told to self-isolate by the NHS Covid-19 app between 8 and 14 July, new figures show. If you're one of them, there's a range of financial support you could get.
Royal Mail warns of delivery delays across 10 areas as workforce hit by Covid-19 absences - here's the full list of postcodes affected

22 July 2021

Royal Mail has warned that households in 10 areas of England, including Blackpool and Worthing, could face delays to to both parcel and letter deliveries as staff members have been forced to self-isolate due to Covid-19. Here's what you need to know and what you can do if you're facing delays.

MSE Tools & Calculators

Clever ways to calculate your finances

Cheap Energy Club

We ensure you're on the cheapest tariff

Tool

Loans Eligibility

All of the top unsecured personal loans

Tool

Credit Card Eligibility

Tools for different credit card types & purchases

Tool

Mortgage best buys

Compares thousands of mortgages

Tool

Mortgage Calculator

Eight calcs for all your mortgage sums

Tool

Free complaints tool

Resolver - the automated complaints system

Tool

Tools and Calculators

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, Admiral, Bank of Ireland, Cahoot, Hastings Direct, M&S Bank, MBNA, Post Office, Ratesetter, Sainsbury's Bank, Santander, Tesco Bank, Virgin Money

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.

How this site works

We think it's important you understand the strengths and limitations of the site. We're a journalistic website and aim to provide the best MoneySaving guides, tips, tools and techniques, but can't guarantee to be perfect, so do note you use the information at your own risk and we can't accept liability if things go wrong.

This info does not constitute financial advice, always do your own research on top to ensure it's right for your specific circumstances and remember we focus on rates not service.
We don't as a general policy investigate the solvency of companies mentioned (how likely they are to go bust), but there is a risk any company can struggle and it's rarely made public until it's too late (see the Section 75 guide for protection tips).

Do note, while we always aim to give you accurate product info at the point of publication, unfortunately price and terms of products and deals can always be changed by the provider afterwards, so double check first.
We often link to other websites, but we can't be responsible for their content.
Always remember anyone can post on the MSE forums, so it can be very different from our opinion.

MoneySavingExpert.com is part of the Moneysupermarket Group, but is entirely editorially independent. Its stance of putting consumers first is protected and enshrined in the legally binding MSE Editorial Code.

Please read the Full Terms & Conditions, Privacy Policy, Cookie Policy, How this site is financed and MSE's Editorial Code.

In this guide

In this guide

Tesco Bank to close all existing current accounts in November – here's what it means for its 213,000 customers

App-based Starling and Monzo top MSE's latest banking service poll – see how your bank fared

Energy price cap could be extended beyond 2023 and households given personalised switching advice under new Government plans

Martin Lewis explains the financial help you can get if you've been 'pinged' and told to self-isolate by the Covid app or NHS Test & Trace

Royal Mail warns of delivery delays across 10 areas as workforce hit by Covid-19 absences - here's the full list of postcodes affected

Cut existing loan costs

Free calculator shows if you'll save by switching loans

Best-buy personal loans

How to cut existing loan costs, step-by-step

Step 1: Find out your settlement figure

Step 2: Find YOUR new top loan rate

Cheapest loans under £3,000

Cheapest loans £3,000 - £4,999

Cheapest loans £3,000 - £4,999

Cheapest loans £5,000 - £7,499

Cheapest loans £5,000 - £7,499

Cheapest loans £7,500 - £15,000

Cheapest loans £7,500 - £15,000

Cheapest loans £15,001 - £20,000

Cheapest loans £15,001 - £20,000

Cheapest loans £20,001 - £25,000

Cheapest loans £20,001 - £25,000

Cheapest loans over £25,000

Cheapest loans over £25,000

Step 3: The BIG reveal – check if you can save

Coronavirus help if you're struggling to repay an existing loan

Q&A: Cutting loan costs

Share this guide

MSE News

Martin's Blog

Deals Blog

Clever ways to calculate your finances

How this site works

More tools from

Cheap Energy Club

Credit Card & Loans Eligibility Calculator

Income Tax Calculator

Ultimate Mortgage Calculator

Cheap Mobile Finder

Credit Club

Compare Travel Money

Compare Broadband Deals