Whether you need to make some home improvements, dream of a once-in-a-lifetime holiday or want to get a new car instead of an old banger, sometimes only a loan will do. Borrow wisely and it can be a highly cost-effective choice, but of course, it all depends on the rate you're able to get.
Competition is fierce in the personal loan sector with providers slashing their rates on a regular basis, so it could be a great time to get on board. We want to help make the process of securing the right kind of finance as simple and stress-free as possible, and that's why we've broken it down for you – here's an overview of the cheapest personal loans available to suit your level of borrowing.
Sometimes you're only going to need a minimal cash injection, but just bear in mind that the smaller the sum the higher the rate tends to be. Sounds strange, but it's true! However, there are still some good deals to be found.
Sainsbury's Bank currently offers the top rates for this level of borrowing. A loan of £1,000 over a one-year term comes with a rate of 18.4%, resulting in payments of £91.21 per month. Or, you can borrow £2,000 for two years at the same rate, with monthly payments of £98.89.
The next step up will usually see your rate drop considerably, and in some cases, the monthly repayments won't actually be any more than if you'd have borrowed less. Case in point: you can borrow £3,000 over three years with Hitachi Capital and will pay just 7.8%, resulting in a monthly payment of £93.37.
This tier sees rates starting from as low as 5.5% APR, with Clydesdale Bank offering loans of £5,000 over three years at precisely this rate for repayments of £150.79 per month.
This is where competition really heats up. Providers are seriously battling for your business and are clamouring to offer the lowest rates possible, with reductions happening on a regular basis.
Currently the top pick comes from Cahoot, who will offer you rates of just 4.2% APR at this tier. A loan of £7,500 over five years will result in monthly payments of just £138.67 per month, and even a loan of £15,000 over the same term will mean monthly payments of £277.33, again offered at the market-leading rate of 4.2%.
This is the level where rates start to creep back up again, but that doesn't mean you have to spend a fortune. Loans from AA start from just 5.8% APR at this level, so a loan of £20,000 spread over five years will result in monthly repayments of £383.42.
Clydesdale Bank also offers APRs starting at 5.8%, however thanks to the gross annual rate being slightly higher (5.85%) it means the same £20,000 loan will result in ever-so-slightly higher monthly repayments £383.86.
Not all providers will offer loans at this level – here is where it starts to edge into secured loan territory – but a few will. Currently the best rates offered again come from AA and Clydesdale with, happily, the same APRs as the previous tier, meaning £25,000 over five years will cost you £479.27 and £479.82 per month respectively.
So there you have it, the cheapest loans available according to your preferred level of borrowing. However, it's important to remember that everything depends entirely on your individual circumstances – rates are representative and are subject to change according to your credit rating and the term of the loan, and you may not be eligible to receive the headline rate offered.
Nonetheless, if you've got a decent credit rating you might find you're lucky enough to secure the top rates, so make sure to use our loan calculator to start the process and see if you can cut the cost of borrowing.
Compare loan repayments and interest with our easy-to-use loan calculator
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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