Best Personal Loans July 2022
After the best personal loan? 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.
Borrow only for planned expenses, borrow as little as possible, and pay it back as quickly as possible while keeping monthly payments affordable.
We’ve listed some of the cheapest personal loan deals available right now, but the best way to make sure you’ll be accepted before you apply is to visit our partner site. GoCompare and use its eligibility checker (opens in a new tab).
What is a personal loan?
Personal loans, also known as unsecured loans, allow you to borrow an agreed sum of money from a lender for an agreed period of time at a fixed interest rate and pledge to repay it in repayments. fixed monthly.
The interest you pay is basically the lender’s fee for lending you money – so you pay back the amount you borrowed plus interest each month. Getting the best rate means you can keep costs as low as possible. It is also important that you only borrow what you need.
We’ve listed some of the best offers available right now below, but the best way to make sure you’ll be accepted before you apply is to first visit our partner site GoCompare and use the eligibility checker.
If you want to know more about what taking out a personal loan entails and what the alternatives are, we explain more below.
CHEAPEST PERSONAL LOANS
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
Cheapest personal loans borrowing £5,000 over 3 years
These are the best loans based on a loan of £5,000 repaid over 3 years.
Cheapest personal loans borrowing £10,000 over 5 years
These are the cheapest loans based on a loan of £10,000 repaid over 5 years.
This list is updated regularly, with advice from a data analyst By default (opens in a new tab).
WHAT YOU NEED TO KNOW BEFORE SUBSCRIBING A PERSONAL LOAN
There are two factors you need to consider when taking out a personal loan: your credit score and the level of disposable income you have.
A good credit rating indicates a good history of paying off credit on time. It shows that you can manage credit responsibly and make yourself attractive to potential lenders. Your credit score may also offer you a better interest rate.
If you have a high score, you will likely get the highest advertised interest rate. If your credit score is not so good, you can still get the loan, but you will be considered a bigger risk to the lender and therefore charge a higher interest rate. Before applying for a personal loan, check your credit score with credit reference agencies Experian, Equifax or TransUnion.
Your disposable income will either enthuse you about a lender – or not. The lender estimates your disposable income based on where you live, the number of dependents and your salary. You need your disposable income to be high enough or you won’t get a loan, no matter how good your credit score.
CAN I GET A CHEAPER LOAN WITH MY BANK?
You may receive preferential treatment when applying for a loan if you are already a customer of a lender. For example, fast credit decisions and instant access to funds are offered to HSBC Premier customers who want to take out a loan between £7,000 and £30,000.
In some cases, there may also be preferential rates when applying for a loan if you are already a customer of a lender. Santander, for example, gives preferential rates to its 1|2|3 and Select customers on loans between £15,001 and £25,000. If you have a Santander account, you could get a 3.3% rate 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 the personal loan
There are several alternatives to taking out a personal loan that may actually turn out to be cheaper.
0% interest credit cards
A 0% interest credit card could be a cheaper way to borrow £5,000 because you don’t have to pay interest. 0% percent credit card allow you to spread the cost of large purchases, because you don’t have to pay interest at all – as long as you meet minimum payments. For instance, Halifax the credit card offers a 34 month interest period of 0% – if you are approved for this credit card you get the full 34 months at 0%. However, you need a good credit score to get a 0% interest credit card – the longest interest-free periods of up to two years being given to those with a high credit score .
0% Balance Transfer Cards
Using a 0% balance transfer credit allows you to transfer existing credit card debt and extend the repayment period for a small fee. For instance, Bank of Sainsbury’s
offers up to 22 months at 0% with its transfer card. Again, you’ll need a good credit rating to qualify for the longer interest-free periods. Before applying for a 0% credit card, use an online eligibility checker, like the one on our sister site GoCompare, before applying. You can also check your credit score with credit reference agencies Experian, Equifax or TransUnion.
Borrow from your employer
Some employers offer loans to their staff. These loans are generally intended for the purchase of travel subscriptions or bicycles in order to get to the office. With this type of loan, you repay it directly from your salary within a year. However, loans to employers are not always reserved for travel expenses alone. The retailer Timpson, for example, offers interest-free loans to its employees (opens in a new tab) for personal reasons through its Dreams Come True program. The loan is usually repaid by a direct deduction from workers’ wages at a low and affordable amount.
There are also around 500 credit unions in the UK which help people who find it difficult to access loan services. Each has its own services and rules on who can get a loan.
Government guaranteed loans
There is also the government guaranteed loan known as the interest free loan scheme, run by credit unions and other lenders in parts of the UK such as Manchester, Herefordshire, Shropshire and Worcestershire. Prospective borrowers must apply through the interest-free loan program website (opens in a new tab). You are asked to complete their application form and provide a copy of a recent bank statement and benefit statement not older than three months and bearing your name.
IF YOU ARE IN THE FIGHT AGAINST DEBT
If you’re struggling with debt, talk to your creditors to see what help is available to help you pay it off. Companies you owe money to may offer programs that can help you with your payments or have a hardship fund that you can apply for.
You can also get free independent debt advice from charities such as Citizens Advice, StepChange and Turn2Us. They can advise you on the best course of action, which could include a debt management plan, an Individual Voluntary Arrangement (IVA) or debt relief orders.
A debt counselor can also tell you about the Breathing Space program. This gives you temporary protection from your creditors for up to 60 days while you get debt advice and develop a plan.