Best personal loans February 2024

When looking for the best personal loans, look to borrow at the cheapest rate

Percent sign in magnifying glass
(Image credit: Getty images)

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

If you need to borrow money, loan rates are fairly low right now, but interest rates are starting to climb – making borrowing more expensive. So, only borrow for planned spending, 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. Make sure you check whether you'll be accepted before you apply by going to our sister site GoCompare and using its eligibility checker

Cheapest personal loans

We've outlined examples of the cheapest personal loan options if you want to borrow £3,000-£4,999, £5,000-£7,499, £7,499-£15,000 or over £15,000. We’ve looked at what you will pay over 3 and 5 years. These are just examples, and you’ll have to go through to the eligibility checker to see what the rate is for the amount you are borrowing.

Last updated 29/03/23

Cheapest personal loans borrowing £3,000-£4,999

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Loan rangeProviderAPRTerm available
£3,000 - £4,999AA*9.8%1-5 years

Note that where there is more than one lender offering the lowest rate we have used the lender that is more widely available to customers (ie not existing current account customers only).

For example if you borrow £3,000 over 3 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£3,000AA*9.8%£95.94£3,453.84£453.84

If you borrow £3,000 over 5 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£3,000AA*9.8%£62.84£3,770.40£770.40

Cheapest personal loans borrowing £5,000-£7,499

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Loan rangeProviderAPRTerm available
£5,000 - £7,499Sainsbury's Bank (Nectar Card)6.1%1-5 years

For example if you borrow £5,000 over 3 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£5,000Sainsbury's Bank (Nectar Card)6.1%£151.96£5,470.56£470.56

If you borrow £5,000 over 5 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£5,000Sainsbury's Bank (Nectar Card)6.1%£96.51£5,790.60£790.60

Cheapest personal loans borrowing £7,500 - £15,000

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Loan rangeProviderAPRTerm available
£7,500-£15,000Sainsbury's Bank (Nectar Card)4.8%1-5 years

For example if you borrow £7,500 over 3 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£7,500Sainsbury's Bank (Nectar Card)4.8%£223.76£8,055.36£555.36

If you borrow £7,500 over 5 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£7,500Sainsbury's Bank (Nectar Card)4.8%£140.50£8,430.00£930.00

Cheapest personal loans borrowing over £15,000

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Loan rangeProviderAPRTerm available
Over £15,000Sainsbury's Bank (Nectar Card)4.9%2-5 years

For example if you borrow £20,000 over 3 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£20,000Sainsbury's Bank (Nectar Card)4.9%£597.56£21,512.16£1,512.16

If you borrow £20,000 over 5 years:

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Loan amountProviderAPRMonthly repaymentTotal loanCost of loan
£20,000Sainsbury's Bank (Nectar Card)4.9%£375.53£22,531.80£2,531.80

This list is updated regularly, with guidance from data analyst Defaqto

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. You commit to paying back that loan in fixed monthly repayments.

The interest you pay is essentially the lender’s fee for lending you money. 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.

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.

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 level of disposable income will also be a key factor with lenders, who will estimate your disposable income based on where you live, your number of dependents and your salary. No matter how good your credit score is you'll need your disposable income to be high enough otherwise you will not get a loan.

Can I get a cheaper loan with my bank?

Why you can trust The Money Edit Our experts spend hours analysing and reviewing products and services to help you find what's best for you. Find out more about how we analyse.

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 for 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. Santander, for example, gives preferential rates to its 123 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 £15,001 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. These 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's 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 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 for personal reasons to its employees 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 Herefordshire, Shropshire and Worcestershire. Potential borrowers must make an application via the No Interest Loan scheme website. You'll need to complete the 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.

What to do 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 that you are eligible to apply for. 

You can also get free independent debt advice from charities like Citizens Advice, StepChange and Turn2Us. They can advise as to the best course of action, which could include a debt management plan, 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 Binns

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