The best way to find a low interest loan is to shop around and find the best rates using this comparison.
Look for a loan with the lowest representative APR. This is the annual percentage rate lenders charge when you take out a loan, and factors in all the associated costs of your loan.
Although some loans come with low interest rates, it's important to check the APR as this takes into account interest rates and associated fees.
Banks and building societies may not offer the cheapest loans, so compare all your options before you apply.
Other things to watch out for
While the interest rate tells you how much the loan costs there is more to choosing the right loan than just picking the lowest interest rate:
Get the right type of loan
There are lots of different types of loans but they are all either secured or unsecured.
Unsecured loans do not use your belongings, you just borrow the money from the lender and they have no direct claim on your property. They are sometimes called personal loans.
Secured loans are linked to something you own, and if you do not pay back the loan the lender can sell it to get their money back.
Choosing the right type is important because they have different risks and benefits. For example, secured loans may allow you to borrow larger sums but also put your property directly at risk.
Choose the right loan term
You may be able to get a lower interest rate by choosing a longer loan term, but this does not always mean the loan will be cheaper.
While taking longer to pay your loan will make your monthly payments lower you will also be paying interest for longer, so the loan could cost you more overall.
Choose the shortest loan term that keeps your monthly payments affordable.