Best personal loans December 2022

When looking for the best personal loans, we recommend you borrow at the cheapest rate. Here are the best personal loans on the market

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After the best personal loans? It will entirely depend on how much you want to borrow, your credit rating, and your personal circumstances.

If you need to borrow money, loan rates are low right now, but interest rates are starting to climb - making borrowing more expensive. 

Only borrow for planned spend, borrow as little as possible and repay it as quickly as you can while keeping the monthly payments affordable.

We have listed some of the cheapest personal loan deals available now, but the best way to ensure you will be accepted before you apply is to go to our sister site GoCompare and use its eligibility checker (opens in new tab)

What is a personal loan?

Personal loans, also known as unsecured loans, allow you to borrow an agreed amount of money from a lender for an agreed period of time at a set interest rate and commit you to paying it back in fixed monthly repayments.

The interest you pay is essentially the lender’s fee to lend money to you - so, you pay the amount you borrowed plus the interest back each month. Getting the best rate means you can keep costs as low as possible. It is also important you only borrow what you need.

We have listed some of the top deals available now below, but the best way to ensure you will be accepted before you apply is to first go to our sister site GoCompare and use the eligibility checker.

If you want to know more about what’s involved in taking out a personal loan and what the alternatives are, then we explain more below.

Cheapest personal loans

Last checked 06/12/22. Last updated 29/11/22

Some of the cheapest personal loan options if you want to borrow £3,000 over 3 years, £5,000 paid over 3 years or £10,000 over 5 years.

Cheapest personal loans borrowing £3,000 over 3 years

GoCompare’s eligibility checker (opens in new tab)

Novuna | 9.7% APR | Monthly repayment £95.81 | Total amount repayable if you borrow £3,000 is £3,449.16

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 33.2% APR. This loan is open to new and existing customers and it can be opened via online or phone. You can make a minimum advance of £1,000 and a maximum of £35,000. There is no set up fee and the minimum age to apply for this loan is 21 years.

GoCompare’s eligibility checker (opens in new tab)

MBNA | 9.8% APR | Monthly repayment £95.94 | Total amount repayable if you borrow £3,000 is £3,453.84

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 29.9% APR. This loan is open to new and existing customers and it can be opened online only. You can make a minimum advance of £1,000 and a maximum of £25,000 with no early repayment charge. There is no set up fee and the minimum age to apply for this loan is 18 years.

M&S Bank (opens in new tab)

M&S Bank (opens in new tab) | 9.9% APR | Monthly repayment £96.07 | Total amount repayable if you borrow £3,000 is £3458.52

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 14.9% APR. This loan is open to new and existing customers. You can make a minimum advance of £1,000 and a maximum of £25,000. There is no set up fee and the minimum age to apply for this loan is 18 years.

Cheapest personal loans borrowing £5,000 over 3 years

These are the best loans based on borrowing £5,000 repaid over 3 years.

GoCompare’s eligibility checker (opens in new tab)

Novuna | 5.9% APR | Monthly repayment £151.51 | Total amount repayable if you borrow £5,000 is £5,454.36

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 9.8% APR. This loan is open to new and existing customers and it can be opened via online or phone. You can make a minimum advance of £1,000 and a maximum of £35,000. There is no set up fee and the minimum age to apply for this loan is 21 years.

AA (opens in new tab)

AA (opens in new tab) | 6.3% APR | Monthly repayment £152.39 | Total amount repayable if you borrow £5,000 is £5,486.04

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 16.3% APR. This loan is open to new customers and it can be opened online only. You can make a minimum advance of £1,000 and a maximum of £25,000 with no early repayment charge. There is no set up fee and the minimum age to apply for this loan is 21 years.

GoCompare’s eligibility checker (opens in new tab)

Tesco Bank | 6.4% APR | Monthly repayment £152.60 | Total amount repayable if you borrow £5,000 is £5,493.60

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 15% APR. This loan is open to new customers and Club Card holders and it can be opened online only. You can make a minimum advance of £1,000 and a maximum of £35,000 with no early repayment charge. There is no set up fee and the minimum age to apply for this loan is 22 years.

Cheapest personal loans borrowing £10,000 over 5 years

These are the cheapest loans based on borrowing £10,000 repaid over 5 years.

M&S Bank (opens in new tab)

M&S Bank (opens in new tab) | 4.9% APR | Monthly repayment £187.77 | Total amount repayable if you borrow £10,000 is £11,266.20

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 14.9% APR. This loan is open to new and existing customers. You can make a minimum advance of £1,000 and a maximum of £25,000. There is no set up fee and the minimum age to apply for this loan is 18 years.

HSBC Bank (opens in new tab)

HSBC Bank (opens in new tab) | 4.9% APR | Monthly repayment £187.77 | Total amount repayable if you borrow £10,000 is £11,266.20

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 24.9% APR. This loan is open to new and existing customers. You can make a minimum advance of £1,000 and a maximum of £25,000. There is no set up fee and the minimum age to apply for this loan is 18 years.

GoCompare’s eligibility checker (opens in new tab)

Tesco Bank | 5.10% APR | Monthly repayment £188.64 | Total amount repayable if you borrow £10,000 is £11,318.40

Check if you qualify for this personal loan on our sister site GoCompare’s eligibility checker (opens in new tab).

This rate is a representative APR which means while you could be accepted for the loan you may be offered a higher interest rate of a maximum 15% APR. This loan is open to new customers and Club Card holders and it can be opened online only. You can make a minimum advance of £1,000 and a maximum of £35,000 with no early repayment charge. There is no set up fee and the minimum age to apply for this loan is 22 years.

This list is updated regularly, with guidance from data analyst Defaqto (opens in new tab).  

WHAT YOU NEED TO KNOW BEFORE TAKING OUT A PERSONAL LOAN

There are two factors that you should consider when you take out a personal loan: your credit score and the level of disposable income you have.

A good credit score indicates a good track record of paying credit back on time. It shows you can manage credit responsibly and make you attractive to prospective lenders. Your credit score can also bag you a better interest rate. 

If you have a high score you are likely to get the top interest rate advertised. If your credit score is not so good you could still get the loan but you’ll be seen as more of a risk to the lender so charged a higher interest rate. Before you apply for a personal loan, check your credit score with credit reference agencies Experian, Equifax or TransUnion.

Your disposable income will either enthuse you to a lender - or not. The lender estimates your disposable income based on where you live, number of dependents and salary. You need your disposable income to be high enough otherwise you will not get a loan - no matter how great your credit score is.

CAN I GET A CHEAPER LOAN WITH MY BANK? 

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You may get preferential treatment when applying for a loan if you’re already a customer with a lender. For example, quick credit decisions and instant access to funds are made to HSBC’s Premier customers looking to take out a loan between £7,000 and £30,000. 

In some cases there can also be preferential rates when applying for a loan if you’re already a customer with a lender. Santander, for example, gives preferential rates to it 1|2|3 and Select customers on loans between £15,001 and £25,000. If you have a Santander account, you could get a rate of 3.3% on loans between £15,001 and £25,000. If you have a Santander 123 account, you could pay 2.8% on loans between £15,0001 and £25,000.

Alternatives to taking out a personal loan

There are several alternatives to taking out a personal loan that may actually work out cheaper.

0% interest credit cards

A 0% interest credit card could be a cheaper way of borrowing £5,000, as you do not have to pay interest. 0% percent credit cards allow you to spread the cost of big purchases as you don’t have to pay interest at all - as long as you keep up with minimum payments. For example, Halifax credit card offers a 0% interest period of 34 months - if you’re accepted for this credit card you get the full 34 months at 0%. You do, however, need a good credit score to get a 0% interest credit card – with the longest interest-free periods of up to two years given to those with a high credit score. 

0% balance transfers cards

Using a 0% balance transfer credit card allows you to shift debt from an existing credit card and extend the time period of paying it back for a small fee. For example, Sainsbury’s Bank

offers up to 22 months at 0% with its credit transfer card. Again, you’ll need a good credit score to be eligible for the longest interest-free periods. Before you apply for any 0% credit card, use an online eligibility checker, like the one from our sister site GoCompare, before making an application. You can also check your credit score with credit reference agencies Experian, Equifax or TransUnion.  

Borrowing from your employer

Some employers offer loans to their staff. These loans are usually for buying travel season tickets or bikes in order to commute to the office. With this kind of loan you pay it back directly from your salary over the space of a year. However, employer loans are not always just for travel costs. Retailer Timpson, for example, offers interest-free loans to its employees (opens in new tab) for personal reasons via its Dreams Come True scheme. The loan is usually paid back by a direct deduction from workers’ wages at a small and affordable amount. 

Credit Unions

There are also around 500 credit unions in the UK that help people who may struggle to access lending services. Each has its own services and rules on who can get a loan. 

Government-backed loans

There is also the government-backed loan known as the No Interest Loan Scheme, run by credit unions and other lenders in certain parts of the UK such as Manchester, Herefordshire, Shropshire and Worcestershire. Potential borrowers must make an application via the No Interest Loan scheme website (opens in new tab). You are asked to complete their application form and provide a copy of a recent bank statement and a benefit statement dated within the last three months with your name on it.

IF YOU ARE STRUGGLING WITH DEBT

If you are struggling with debt, speak to your creditors to see what help is available to help with repayments. The firms you owe money to may offer schemes that can help you with your payments or have a hardship fund you are eligible to apply to. 

You can also get free independent debt advice from charities like Citizens Advice (opens in new tab), StepChange (opens in new tab) and Turn2Us (opens in new tab). They can advise as to the best course of action, which could include a debt management plan, an individual voluntary arrangements (IVAs) or debt relief orders. 

A debt adviser can also talk to you about the Breathing Space scheme. This gives you temporary protection from your creditors for up to 60 days while you get debt advice and make a plan.

Katie is staff writer at The Money Edit. She was the former staff writer at The Times and The Sunday Times. Her experience includes writing about personal finance, culture, travel and interviews celebrities.  Her investigative work on financial abuse resulted in a number of mortgage prisoners being set free - and a nomination for the Best Personal Finance Story of the Year in the Headlinemoney awards 2021.

With contributions from