Best personal loan rates

- Advertisement -


I

If you want to borrow a large amount to pay for home improvements, a car or a wedding, a direct personal loan can be an attractive option.

- Advertisement -

Loan interest rates are usually the lowest for amounts between £7,500 and £15,000. Below £7,500, lenders need to charge a higher amount to make it worth their while. Above £15,000, they charge more because their potential losses are huge.

- Advertisement -

We have taken a look at this category of loans and identified the lowest rate loans that perform well against various other criteria.

Our personal loan star rating is determined entirely by our editorial team. For details, see our methodology section below.


MBNA

1. MBNA

April (Representational) 2.80%

Early Repayment Fee* Yes

Late Payment Charge** £0

our decision

- Advertisement -

There is no charge to make an additional payment of your balance if you wish, but charges do apply on full early repayment. Paid leave of up to two months per year is available for eligible borrowers.

MBNA loans are available through Lloyds Bank.

professionals

  • minimum april
  • Up to 2 paid holidays per year

Shortcoming

  • £25 late payment fee
Compare Personal Loans from Top Lenders

take part

2. Kahoot

April (Representational) 2.80%

Early Repayment Fee* Yes

Late Payment Charge** £0

our decision

Cahoot has this prominent representative APR of 2.8% on loans up to £20,000 – although the availability of larger loans at lower rates shouldn’t encourage you to borrow more than you can afford or need.

You can overpay on your Cahoot loan at no extra cost, although the lender charges a fee for prompt repayment in full. There are also no fees for missed payments (though your credit score is likely to take a hit).

professionals

  • chief representative april
  • Loans up to £20k at 2.80%

Shortcoming

  • Minimum age 21
  • no branch network
Compare Personal Loans from Top Lenders

M&S Bank

3. M&S Bank

April (Representational) 2.80%

Early Repayment Fee* No

Late Payment Charge** £0

our decision

At a representative APR of 2.8%, personal loans from M&S are almost the market leader. But the same rate also applies for 12 months to seven years which also provides a good dose of flexibility.

You can overpay on your M&S loan free of charge but will incur a penalty for settling the full balance before your selected term.

professionals

  • Same rate on terms of up to 7 years
  • Market leading APR . near

Shortcoming

  • £10,000 minimum income requirement
Compare Personal Loans from Top Lenders

Sainsbury Bank

4. Sainsbury’s Bank

April (Representational) 2.80%

Early Repayment Fee* Yes

Late Payment Charge** £25

our decision

Sainsbury’s has the lowest rates, but it requires borrowers to have a Nectar card for at least six months. Non-Nectar card holders are charged a higher representative APR and can only borrow for up to three years.

Overpayments can be made for free, but there is a fee for prematurely repaying the loan.

professionals

  • chief representative april
  • Opportunity to top up loan at the same rate

Shortcoming

  • Requires a Nectar card to qualify
  • £25 late payment fee
Compare Personal Loans from Top Lenders

Tesco Bank

5. Tesco Bank

April (Representational) 2.80%

Early Repayment Fee* Yes

Late Payment Charge** £12

our decision

At rep 2.90%, Tesco charges just a whisker off the top loan rates on the market. While this rate only applies to terms between 12 and 60 months, it is possible to take a loan of up to seven years.

Tesco Clubcard holders can “positively affect your application” according to the lender’s website, although it is not mandatory to have one to apply.

professionals

  • chief representative april
  • Terms up to 7 years

Shortcoming

  • Representative APR up to a maximum period of 3 years only
  • £12 late payment fee

*Based on the settlement figures prescribed under the Consumer Credit (Early Settlement) Regulations, 2004. It states that if you have less than 12 months remaining on your loan, providers can charge interest for up to 28 days. An additional 30 days of interest can be added if the loan term has more than one year remaining, taking the total maximum penalty to 58 days of interest.

** Late or missed loan payments will negatively affect your credit score


methodology

We took these factors into consideration when designing our star ratings for the best lenders for loans in the £7,500 to £15,000 range:

  • Rate of interest: We looked at the representative APR – fixed for the tenure of the loan
  • Period: Loan tenure and interest rate charged
  • Flexibility: Availability of option to make full payment within the period without fee
  • Fee: Fees for late or missed payments, if applicable
  • other factors: Other factors including availability of paid leave

,*Research done in December 2021,


What is Personal Loan?

Personal loan is another name for unsecured loan. This means it is the borrowing which is taken based on your income, personal circumstances and credit score. It is not protected by any property like your house or car.

This means that the borrowing limit on a personal loan is usually lower.

How much interest is charged on personal loan?

Interest rates are currently at historically low levels, meaning you can borrow between £7,500 and £15,000 for less than 3%. Loans for amounts greater or less than this band are usually priced higher.

It’s important to note that you won’t always get the rate you see advertised. The rules mean that lenders only have to give the advertised rate to 51% of those who apply. Hence it is described as ‘Representative’ Annual Percentage Rate (APR).

Can I get a loan with bad credit?

Lenders tend to offer their best (lowest) rates to people with strong credit scores, so if your credit is not as good as it could be, you will be offered a higher rate, or possibly not offered the loan.

What is soft search?

The best way to find out how you stand is to use an eligibility checker to see what deals you’re most likely to be accepted for. This is also known as a ‘soft search’ and it does not leave any trace on your credit profile.

For how long can I take a loan?

You can borrow for more than 12 months or over several years (usually up to 5 years, or sometimes 7). If you borrow for a longer period of time, the amount you pay each month will be lower, but the total amount you pay is likely to be higher.

How do loans work in practice?

If your application is approved, the money should be in your account within hours and certainly within a few days in many cases. You have to start making monthly payments after one month.

It is really important to make your payments in full and on time to avoid getting hit by late or missed payment charges. Along with the cost, non-payment can also hurt your credit score.

What should I do if I have difficulty making my payment?

If you are struggling to repay your loan, contact your lender in advance. This can provide you with one month of paid leave if you have made all your previous payments.

If you have more serious financial issues, meaning you can’t make loan repayments, contact the lender again to discuss the issue. It is better to be open than to ignore the problem.

It may be able to restructure the loan to give you more time to make payments. You can also contact a charitable organization such as the National Credit Line or Citizens Advice for guidance.

Can I repay the loan early?

If you find that you are in a position to repay the loan prematurely, that is your prerogative, but the lender may charge an early repayment fee, which can be as high as one month’s interest.

smart borrowing tips

Use the aptitude checker: You will have nothing to lose and it will protect your credit score in case you are rejected for a personal loan

Shop for the best rate: A comparison website will enable you to view APR side-by-side. Remember that these are representative only, so you may be offered a higher

Consider borrowing a bit more: In most cases, representative APRs drop when you borrow £7,500. If you are in the market for a loan of this size, it may be wise to borrow a little more to reach a better rate. However, make sure you play it to your advantage rather than borrowing more than you actually need

View options: For example, a 0% purchase credit card that charges no interest at all. However, if you fail to pay your dues within the interest-free period, the APR on credit cards is quite high, so tread carefully.

Compare Personal Loans from Top Lenders

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox