Any loan you take out should be a good match for your spending plans, your credit history and your income level. It is crucial not to overstretch yourself, as managing debt can be challenging. It is also important not to overpay to borrow money, as interest costs and fees can quickly add up and so it is important to find the best loan for you. In this article we take you through the best personal loans in the UK, plus some top tips to make sure you are getting the best possible loan deal.
The best personal loans
The best personal loan deal for you will depend on your financial situation and credit history. It is also important to think about how much you want to borrow and what a realistic repayment term looks like. Below are some of the best personal loan rates in the UK for you to consider. The figures in our table are based on the representative example of £10,000 repaid over five years. The loan amount and rate you are offered will depend on your credit history, your financial circumstances, how much you borrow and how long you want to borrow it for. Keep in mind that applying for too many loans in a short space of time can damage your credit score and make it harder to borrow money in the future. If you need more information on the basics of a loan, read our article ‘What is an unsecured loan?’.
Best personal loans over 5 years – April 2024
| Loan provider | Representative APR (from) | Available loan term | Available loan amount | Monthly payment |
Eligibility checker? |
| TSB | 5.9% | 1 - 7 years | £300 - £50,000 | £192.15 | No |
| Tesco Bank | 6.1%¹ | 1 - 10 years | £1,000 - £35,000 | £193.02 | Yes |
| Santander | 6.2% | 1 - 5 years | £1,000 - £25,000 | £193.47 | No |
| M&S Bank | 6.2% | 1 - 7 years | £1,000 - £25,000 | £193.47 | Yes |
| Sainsbury’s Bank | 6.3%² | 1 - 7 years | £1,000 - £40,000 | £193.91 | No |
| Halifax | 6.6% | 1 - 7 years | £1,000 - £50,000 | £195.23 | Yes |
| Lloyds | 6.7% | 1 - 7 years | £1,000 - £50,000 | £195.67 | Yes (but you will need to be registered for online banking with Lloyds) |
| HSBC | 6.9% | 1 - 5 years | £1,000 - £25,000 | £196.56 | No |
| AIB (NI)³ | 7.1% | 1 - 5 years | £1,000 - £25,000 | £197.85 | No |
| Zopa | 22.9% | 1 - 5 years | £1,000 - £25,000 | £269.40 | Yes |
Representative APR is based on a 5-year loan term
¹Clubcard members receive a preferential rate, non-members will get from 6.5% with monthly repayments from £194.79
²Nectar members receive a preferential rate, non-members will get from 7.0% with monthly repayments from £197
³You must be an existing personal current account customer with AIB (NI) and registered for Online Services
How personal loans work
A personal loan involves borrowing a set amount of money from a provider and then repaying the debt in equal monthly instalments, with interest, over an agreed period of time. It is a form of unsecured borrowing because you do not need to use your home, car or any other valuable asset as security. Read our article ‘Secured vs unsecured loans: Which is best for me?’ to learn which loan type would suit you best.
You can apply for a personal loan online, over the phone or in person at a high-street bank branch. In most cases, you will need to prove that you are a UK resident and over the age of 18.
If your loan application is approved, you will then need to start paying the money back. What you owe will also start to grow with interest. Your lender will have told you how much you will need to pay back each month as a part of the application process. You can pay more than the minimum amount in order to try and clear your debt more quickly, though some lenders will charge a fee to let you do this. The fees you have to pay should be made clear by the lender before you sign up.
A lender will conduct a credit check and an affordability check. This is when the lender decides if you are a trustworthy borrower and if you can afford the monthly repayments. Some applicants will be rejected, often because the lender decides that there is too great a risk of the repayments not being paid on time. You can avoid unnecessary rejections by keeping track of your credit score and checking your eligibility for a loan online without completing a full application. Find out how to check your score by reading our article ‘The best way to check your credit score for free’ and see what you can do to improve it by reading ‘How to improve your credit score quickly’.
It is not impossible to get a loan with a low credit score. Read our article ‘How can I get a loan with poor credit?’ to learn more.
The key figures in a personal loan
Here are some important numbers to look out for as you compare personal loans.
- Loan amount: Most unsecured loans are between £1,000 and £25,000, though some people may be able to borrow much more.
- Loan term: You will usually have one to seven years to repay your loan, but some lenders will offer longer terms.
- Loan fees: Fees will vary from lender to lender and sometimes depend on what you intend to use the money for and when you pay it back.
- APR (annual percentage rate): This is the annual rate that is used to help you work out the cost of borrowing money. It takes into account the interest you are being charged as well as any other fees that are applicable.
- Representative APR (annual percentage rate): This is the rate that a lender expects at least 51% of successful applicants to be offered. You may be charged more or less than this figure, but it can be a good tool to compare providers. Read our article ‘What is representative APR?’ for more information.
- Early repayment charge: This is a percentage figure that some lenders will charge for you to clear your debt before the end of the loan term. The rules are slightly different if you took out a loan prior to February 2011. There should be no charge for paying off up to £8,000 and for loans over £8,000, lenders can charge up to 1% (only 0.5% if you are in the final year of the repayment period).
- Credit score: Your credit score is an assessment of how trustworthy a borrower you are. A low credit score may mean your loan application will be rejected, while a high score suggests you could be offered the lender’s best rates.
How much can I borrow with a personal loan?
Most personal loan providers will lend between £1,000 and £25,000, but exactly how much you can borrow will be based on your credit history, financial circumstances and repayment period. Some lenders will offer more than £25,000 or less than £1,000, but it should only lend what the borrower can afford to repay.
If your credit score and income suggests that you should be able to afford high monthly payments, you could borrow at the upper end of a lender’s limit. This is especially true if you want a long repayment period that will spread out the debt and lower each monthly payment. However, if you have a poor credit history and a low or inconsistent income, you may find it harder to convince a lender that you can be relied upon to repay the debt and that you can afford it. In some cases, lenders will only offer top loan amounts to applicants who have an existing relationship with the organisation, such as holding a current account.
Keep in mind that even if it is possible to borrow a bit extra, it is a good idea to stick to the amount you need. Even if the additional money only slightly increases your monthly payments, it could have a significant impact on how much you pay overall. Borrowing too much can also put you at risk of missing repayments and losing control of your debt. If you ever feel like you are struggling with debt, take a look at our article ‘Where to get free debt advice’ to find free expert help.
How to choose the best personal loan
Try to compare as many different loan deals as possible to find the best personal loan for you. The cheapest deal will not necessarily be the right option, but by looking through a range of lenders you can get an idea of what is available. You may find that one lender offers a good interest rate, but not the term length you want. Another could have the right term length available, but not the full loan amount you were hoping for. A good comparison should help you find a deal that ticks as many boxes as possible.
Once you find the best personal loan deal for you, try not to rush into an application. First, take a look at the eligibility criteria. Some lenders may even have an online eligibility checker you can use. By making sure you are likely to be successful before you apply, you can avoid any unnecessary rejections appearing on your credit file. Too many credit applications in a short period will give the impression that you are desperate for money and struggling with your finances, which will make it harder to get credit in the future. The perfect scenario is that your first application is a successful one.
What can I use a personal loan for?
You are free to use a personal loan for almost any purpose, with a few important exceptions. The lender will usually require that you state what you intend to spend the money on as part of the application. Most lenders will automatically reject your application if you state that the money is for:
- Gambling
- Illegal activity
- Buying shares
- A deposit for a property
Some lenders may also exclude applicants borrowing for business purposes. You can find out more about specialist business loans in our article ‘What is a business loan?’.
Common reasons to take out a personal loan include paying for:
- A wedding
- A car
- Home improvements
- Debt consolidation
- A holiday
Pros and cons of personal loans
Take a look at these advantages and disadvantages of a personal loan to work out if it is the right option for you.
Pros of personal loans
- Spread the cost of a big purchase
- Borrow at a lower long-term interest rate than most credit cards
- Stability of fixed monthly repayments
- Less risk to your assets compared to a secured loan
- Widely available
- Can be repaid early (in most cases)
- Applications can be approved and money paid out relatively quickly
Cons of personal loans
- Usually a higher interest rate than a secured loan
- Can be difficult to borrow a small sum at an affordable rate
- Often a lower loan amount than with a secured loan
- Missing repayments or failed applications can damage your credit score
- Difficult to get the best interest rate with bad credit
Alternatives to a personal loan
Even the best personal loan may not be the right option for you. There are a lot of different ways to borrow money, fund big events and spread the cost of certain expenses. Here are some alternative options you could consider.
- Secured loan: The obvious alternative to an unsecured personal loan. You will need to use your home, car or other valuable assets as security, but you may be able to access much higher loan amounts and lower interest rates. Read our article ‘What is a secured loan?’ to learn more. We also have information on secure loan deals on our 'The best secured loans'.
- Credit card: A credit card is a much more flexible way of borrowing money compared to taking out a loan. You only pay back what you spend and you can take advantage of limited-time 0% interest options too. Check out our article ‘Best credit cards in the UK’ for more information.
- Remortgaging: This is a common way to raise money for home improvements and involves increasing what you owe on your current mortgage. We have more detail in our article ‘Remortgage to release equity from your home’.
- Car finance: If you planned to take out a loan to pay for a new car, you may find that specialist car finance is an easier option. Read our article ‘Buying a car: what are the best finance options?’ to find out more.
