1. MoneySavingExpert.com
  2. Borrowing
  3. Loans
Skip to content of guide

In this guide

MSE weekly email

FREE weekly MoneySaving email 

For all the latest deals, guides and loopholes simply sign up today – it's spam-free!

FAQs Privacy Past Emails Unsubscribe

Cut existing loan costs

Free calculator shows if you'll save by switching loans

Helen Saxon
Helen Saxon
Updated 13 June 2024

While the lowest loan rates have doubled over the past 18 months, that doesn't mean that you can't cut the cost of existing loans, especially if your credit rating meant you had to take out a high-rate loan in the past. If you're paying more than 6%, it's worth checking if you can save by getting a new loan to pay it off. This guide shows you how to find the best new deal, and has a unique loan-switching calculator so you can see if you'll save.

Skip to content of guide

In this guide

Best-buy personal loans

Please note: This article is about unsecured loans, 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.

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. For a broader introduction to personal loans, try our general loans page. 

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.

MSE weekly email

FREE weekly MoneySaving email 

For all the latest deals, guides and loopholes simply sign up today – it's spam-free!

FAQs Privacy Past Emails Unsubscribe

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, many of the top loans compared below and 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.


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.

Important. For loans up to £5,000 you could be much better off using a money transfer credit card if you can repay the full balance over 9-12 months.

Cheapest loans £1,000 - £1,999

LENDER RATE 
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Santander 13.5% rep APR  Check eligibility
Apply*
M&S Bank 14.9% rep APR (1-7 years) Check eligibility
Apply*
HSBC 16.9% rep APR Check eligibility
Apply*

See all official APR examples.

Cheapest loans £2,000 - £2,999

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Santander 13.5% rep APR Check eligibility
Apply*
Novuna Personal Finance £2,500-£2,999: 14.4% (2-5 years) Check eligibility
Apply*
M&S Bank 14.9% rep APR (1-7 years) Check eligibility
Apply*

See all official APR examples.


Cheapest loans £3,000 - £4,999

Cheapest loans £3,000 - £4,999

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Novuna Personal Finance

£3,000-£3,999: 9.9% rep APR (2-5 years)

£4,000-£4,999: 9.7% rep APR (2-5 years)

 Check eligibility
Apply*
M&S Bank 9.9% rep APR (1-7 years) Check eligibility
Apply*
Santander  9.9% rep APR Check eligibility
Apply*

See all official APR examples.


Cheapest loans £5,000 - £7,499

Cheapest loans £5,000 - £7,499

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Santander 7.2% rep APR Check eligibility
Apply*
Tesco Bank (i) 7.2% rep APR
Must have a Clubcard		 Check eligibility
Apply*
Novuna Personal Finance 7.8% rep APR (2-5 years) Check eligibility
Apply*

See all official APR examples. (i) Tesco Bank loans products are set to be run by Barclays in future, see more info here.


Cheapest loans £7,500 - £15,000

Cheapest loans £7,500 - £15,000

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Tesco Bank (i) 6.1% rep APR
Must have a Clubcard		 Check eligibility
Apply*
Santander 6.2% rep APR
 Check eligibility
Apply*
TSB 6.2% rep APR Check eligibility (i)

(i) Tesco Bank loans products are set to be run by Barclays in future, see more info here. | See all official APR examples.


Cheapest loans £15,001 - £20,000

Cheapest loans £15,001 - £20,000

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Tesco Bank (i) 6.1% rep APR
Must have a Clubcard		 Check eligibility
Apply*
Santander 6.2% rep APR
 Check eligibility
Apply*
TSB 6.2% rep APR Check eligibility (ii)

(i) Tesco Bank loans products are set to be run by Barclays in future, see more info here. (ii) This provider has asked us to link only to our eligibility calculator. | See all official APR examples.


Cheapest loans £20,001 - £25,000

Cheapest loans £20,001 - £25,000

LENDER RATE
(1-5 years or stated) 		CHECK ELIGIBILITY + APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Tesco Bank (i) 6.1% rep APR
Must have a Clubcard		 Check eligibility
Apply*
TSB 6.2% rep APR
 Check eligibility (ii)
Santander 6.4% rep APR
 Check eligibility
Apply*

(i) Tesco Bank loans products are set to be run by Barclays in future, see more info here. (ii) This provider has asked us to link only to our eligibility calculator. | 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.

1. You need to be an existing customer to qualify for these loans

LENDER RATE
(1-5 years or stated) 		APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
First Direct
 £25k-£30k: 6.4% rep APR (1-8 years) Apply 
(not in our eligibility calc)
£30k-£50k: 7.9% rep APR (1-8 years)
Nationwide £25k-£35k: 7.7% rep APR Apply
(not in our eligibility calc)
£35k-£50k: 8.7% rep APR
Bank of Scotland/ Halifax/ Lloyds £25k-£35k: 7.8% rep APR (1-7 years) Apply to Bank of Scotland, Halifax or Lloyds
(not in our eligibility calc)
£35k-£50k: 8.8% rep APR (1-7 years)
NatWest/RBS/Ulster Bank £25k-£35k: 7.9% rep APR (1-8 years) Apply to NatWest, RBS or Ulster Bank
(not in our eligibility calc)
£35k-£50k: 9.9% rep APR (1-8 years)

See all official APR examples.

2. The top open market loan over £25,000

LENDER RATE
(1-5 years or stated) 		APPLY
Representative rate. At least 51% of those accepted must get this rate, others can be charged more.
Tesco Bank (i) £25k-£35k: 7.8% rep APR (1-7 years)
Must have a Clubcard. 		 Apply*
(not in our eligibility calculator) 

See all official APR examples. (i) Tesco Bank loans products are set to be run by Barclays in future, see more info here.

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 home.

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).

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 weekly email

FREE weekly MoneySaving email 

For all the latest deals, guides and loopholes simply sign up today – it's spam-free!

FAQs Privacy Past Emails Unsubscribe
Share this guide
MSE Forum

Have your say in our forum!

Cut existing loan costs

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

MSE tools & calculators

Clever ways to calculate your finances 

Credit Card Eligibility

See which cards are likely to accept you

Tool

Loans Eligibility

See which loans you've the best chance of getting

Tool

MSE App

Get MSE on your Apple or Android phone

Tool

Broadband Unbundled

Compare broadband deals & save

Tool

Mortgage best buys

Compares thousands of mortgages

Tool

Mortgage Calculator

Eight calcs for all your mortgage sums

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: 

M&S Bank, Novuna Personal Finance, Sainsbury's Bank, Santander, Tesco Bank

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