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 the advertised APR is representative, which means lenders only have to offer the advertised rate to 51% of successful applicants. People with a poor credit score 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 7.4% APR for a £2,500 loan over two years. Repayments are £112.39 a month, and the overall interest due is £197.25, plus the original £2,500 loan. Ratesetter charges no penalty if you want to settle the loan early, while Metro Bank charges up to 1% of the outstanding loan. 

£7,500 over three years

TSB is the best pick, offering 2.9% APR with monthly repayments of £217.78 for 36 months. The total repayable is £7840.03 of which £340.03 represents interest charges.

Sainsbury’s Bank will also lend at 2.9% APR. This’ll cost £217.78 per month. Over the course of the loan borrowers will repay £7,840.03, including £340.03 interest. The rate is subject to your credit score and some borrowers will be charged more.

£20,000 over five years

Larger loan rates are also highly competitive. Cahoot will charge 3.0% APR representative to people borrowing £20,000 over five years. That’ll cost £359.37 per month and £1,562 over the life of the loan. You’ll be charged 30 days’ interest to settle the loan early.

Next cheapest is Santander, charging a marginally higher rate of 3.1% APR. It will cost £360.26 per month and a total of £1,615.80. over the five year term of the borrowing. 

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