Loans News

Consumers looking to take out a personal loan will be pleased with the latest research showing that average rates on £5,000 and £7,500 personal loans have fallen since the start of the year. Meanwhile the average rate on a £10,000 personal loan has remained unchanged.

Our research has found that on 1 January the average rate on a £5,000 loan was 7.2%, which had fallen to 7.1% on 1 July. Meanwhile, the average rate on a £7,500 loan was 4.5% on 1 January, while on 1 July it stood at 4.4%. Those looking to borrow £10,000 will find that the average rate has remained at 4.4%.

Those looking to borrow using a personal loan will find that there are many lenders in our loan comparison chart offering rates below the averages. This means that borrowers can get a personal loan rate from as little as 2.8%. To give an idea of what rates are currently available here we’ve highlighted the lowest rates on loans at £5,000, £7,500 and £10,000 that are available to both new and existing customers.

Being aware of credit scores can be a good way of assessing the likelihood of being accepted for a loan, credit card or mortgage, but consumers who see small sudden falls in their score should not let it deter them from applying for credit. Instead, it is important to understand how lenders view credit scores, other factors they consider when lending money and why it is important not to panic if the credit score falls unexpectedly.

The Moneyfacts.co.uk Pick of the Week showcases the best of the latest products or rate changes to hit the consumer finance market

The cost of taking out a personal loan has fallen year-on-year as lenders have cut the interest rates on loans, meanwhile consumers looking to borrow through a 0% purchase credit card will find that the average number of interest-free days offered is now longer compared to a year ago.
Figures due to be released in the latest Moneyfacts UK Unsecured Lending Trends Treasury Report show that the average cost of a £3,000 personal loan over three years has fallen from 14.8% in June 2020 to 14.4% in June 2021. This means that the total cost of an average three-year loan at this term is now £18.48 less compared to a year ago.

The average £5,000 personal loan over a repayment term of three years has fallen from 7.4% in June 2020 to 7.1% in June 2021, making the overall cost of a £5,000 loan on this term £23.16 less now than a year ago.

Those looking to borrow £10,000 over five years will find that although average rates have also fallen, the decrease is not as significant year-on-year as lower loan amounts, falling from 4.5% in June 2020 to 4.4% in June 2021. Overall, the cost of this loan on a five-year term is now £26.16 less compared to the previous year.

While average personal loan rates have fallen on all amounts year-on-year, during the last three months the average £5,000 personal loan rate on a three-year term has increased slightly, from 7.0% in March to 7.1% this month, while the average rates on a £3,000 loan on a three-year term and a £10,000 loan on a five year term have fallen over the last three months, down from 14.8% to 14.4% and 4.6% to 4.4% respectively.

“Consumers looking to consolidate debts or perhaps make home improvements via a personal loan will be pleased to see rates have dropped across a few lending tiers over the last three months,” explained Rachel Springall, finance expert at Moneyfacts.co.uk. “Those borrowing £5,000 will note a slight rise, however the average rate is still down year-on-year. There has also been a couple of lenders leaving the market entirely, namely John Lewis and Starling Bank. If borrowers are considering a small loan, such as £3,000 they may be better off considering an interest-free credit card instead.”