We help you compare low interest personal loans so you can easily find the cheapest loan for your circumstances.
Low interest rate loans can either be secured on your property, or unsecured, but they both tend to be available over periods of one to seven years - although some secured loans can be extended over a longer period.
The longer repayment period means lenders can offer significantly lower interest rates than those available on payday loans, and that whatever your timescale you should be able to find a low interest loan to meet your needs.
However, a number of factors beyond just your timescale will impact which loan is right for you. So whether you’re after low interest loans for bad credit, or want a low interest loan to pay off debt, you’ll need to consider:
Secured or unsecured?
To be offered a secured loan you’ll need to own a property or – in some cases – a car, that you'll need to put forward as a guarantee you'll repay. If you default on the loan, your lender is allowed to reclaim your home or vehicle and sell it in order to recoup their losses; this protection means that they’re often the lowest interest loans available.
Unsecured loans don’t require that surety so they’re more accessible, more flexible and you’re better protected as you don't have to give anything other than your word that you'll repay. However, because of this their interest rates can sometimes be more costly, especially if you have an adverse credit history.
Whether you go for an unsecured or secured loan you'll generally come across fixed rate and variable rate options. If you choose a loan that offers variable interest rates you need to be away that the rate and your repayments could increase or (potentially) decrease during the loan term. Fixed rate loans guarantee the rate of interest throughout the loan period so you pay back the same amount every month, over the full loan term.
What size loan do you need?
Decide how much you need to borrow and compare it against each lender’s minimum and maximum loan limits. Exclude any lenders where you’re proposed loan would be ineligible.
While it can be tempting to borrow more than you really need to so as to give yourself a little 'play money' it's generally best to keep this to the minimum. You'll need to pay interest on anything you borrow so the bigger your loan the more money you'll need to find to cover the cost.
How long will you need to pay it off?
Decide how long you want to take to pay off your loan and make sure any lender you consider getting a quote from can offer a loan to suit.
Remember to arrange your repayments over the shortest period you can afford so that you don't end up paying more for your borrowing than you really need to. It's a good idea to work out how much you can afford per month and on that basis work out how long you need to extend the loan over - just make sure that you’d be able to afford the monthly repayment.
What’s the interest rate?
The interest rate you’re offered will be based on your credit history, whether the loan is secured or unsecured, and its proposed size and duration. If you ask for a loan within lenders’ minimum and maximum limits, you’re more likely to be offered their average loan interest rate (headline APR).
That’s fine if you’ve got a good credit history. On the other hand, if you’re looking for low interest loans for bad credit it’s worth searching for lenders that specialise in customers with bad credit.
Make sure you’d be eligible for their headline rates and use those rates to assess which loans with low interest rate might work out cheapest.
The terms and conditions
Once you’ve established what size loan you need and which loans with low interest are likely to work out cheapest, check their terms, conditions and flexibility.
For example, what (if any) are the charges for paying off the loan early, or extending your loan facility? You should always make sure you’re happy with the terms of a loan before you apply.
Remember, applications for loans will show on your credit history whether you take out the loan or not, so it’s best to do your research before you enquire. Also check what other borrowing options you might have: read our guide, What’s the Cheapest Way to Borrow Money? for ideas.
If you narrow your low interest loans comparison down step by step, you can find the best interest rates on loans from lenders that can also give you the service and the support that you need.