Personal loans of the week

While less flexible than credit cards, personal loans allow you to borrow, repaying a set each month for a fixed period of time. Rates are near historic lows, and can be much cheaper than 0% credit card deals for some borrowers.

The interest rate you’ll pay depends on how much you borrow and how creditworthy you are in the eyes of lenders. Typically the cheapest loans are for people borrowing between £5,000 and £15,000, though prices vary from bank to bank (or between building societies, motor manufacturers and peer to peer lenders, which all offer personal loans).

Remember advertised APRs are ‘representative', which means lenders only have to offer the advertised rate to 51% of successful applicants. People with poorer credit scores might be rejected or offered a loan at a higher rate.

Here’s a round-up of the week’s best headline rates.

Find the best loan for you

£2,500 over two years

Metro Bank has the cheapest short-term loan at 5.9% APR representative, but borrowers must be existing customers. Borrowing £2,500 over two years costs £110.69 a month and borrowers will repay £2,656.53 in total.

If you’re not a Metro Bank customer, the best deal comes from Ratesetter. It charges 7.2% APR for a £2,500 loan over two years. Repayments are £112.16 a month, and the overall interest due is £191.80. Hitachi charges no fees if you want to repay the loan early.  

£7,500 over three years

Sainsbury’s Bank recently cut its interest rates to a record-low 3.1% APR, but only for borrowers with a Nectar Card. This has since been matched by Swedish lender Ikano, who will offer the same terms to anyone, providing their credit score is strong enough. The Ikano deal is also available on any of its repayment terms, while Sainsbury’s Bank charges a (slightly) higher 3.2% for people who want to repay over more than three years.

On a three-year term 3.1% APR deal will cost £218.44 per month, including £375.75 interest over the life of the deal. Both lenders charge up to 58 days’ interest to settle the loan early. 

TSB and Cahoot (a brand of Santander) both lend at 3.2% APR to anyone who meets the credit criteria. Cahoot charges 30 days interest to settle the loan early, while TSB charges 58 days’. That’ll cost £218.77 per month, and £376 in interest over the life of the loan. 

£20,000 over five years

Larger loan rates are also tumbling down. Cahoot will charge 3.2% APR representative to people borrowing £20,000 over five years. That’ll cost £361.15 per month and £1,669 over the life of the loan. You’ll be charged 30 days’ interest to settle the loan early.

HSBC charges a slightly higher 3.3% for customers holding a graduate or Premier account. That’ll cost £362.05 per month and a total of £1,722 over the life of the loan. It also has a 30 day interest early settlement charge.

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