|Minimum Age||21 years|
|Credit Rating Accepted||good|
A loan can be handy to spread the cost of purchases, or if you have a sudden need for extra cash. A low interest loan helps to keep your borrowing more affordable. Compare low interest loans that all have representative APRs under 12% so you'll pay less interest and reduce the overall cost of borrowing.
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With real interest rates you'll see exactly how much you’ll need to pay each month. And which lenders will pre-approve your application before you apply.
|Minimum Age||18 years|
|Credit Rating Accepted||fair|
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Last updated: 3 June, 2021
A low interest loan is one that offers a low rate of interest, which makes borrowing more affordable because you have lower monthly payments and pay less in interest overall.
There are a lot of factors that go into getting low interest loans. The APR you are offered will depend on things such as:
To get a low interest loan, you most likely require a a strong credit score, along with a good credit history.
If you want to get a low interest loan, but your credit is less than ideal, it might be a good idea to take steps to improve your credit score before applying.
There’s a lot more to choosing the right loan than just finding loans with low APR.
Some things you should look out for include:
All loans fall into fall into basic two categories: unsecured loans and secured loans.
Secured loans are linked to something you own – usually your home. If you can’t pay the loan back, the lender could force you to sell your home to get their money back. Although you can usually borrow more if you have a secured loan, you need to think carefully before you go ahead. It puts your home at risk.
Unsecured loans aren’t secured against your belongings. You just borrow the money and pay it back. But, if you can’t pay it back, they can’t get their hands on your property. They’re often called personal loans.
You should always aim to pay off a loan as quickly as your finances allow. The longer your term, the less you'll pay every month, but you'll pay more in interest overall.
Let's say you borrow £3,000 at an interest rate of 9%. Here's how your repayments and over all cost of borrowing will change depending on the loan term:
|Loan term (yrs)||Monthly Payment||Total interest|
Typically, you can get some competitive rates for personal loans of up to £15,000. Interest rates for loans above that and up to £25,000 can be a bit more expensive.
How much a lender is willing to lend you is largely depended on on your income and overall financial history.
No, you won’t necessarily get the representative APR. The representative APR is what least 51% of loan applicants are offered.
The only way to find out for sure what APR you’ll be offered is to apply for the loan.
As with most loans, your credit score will be a major factor in the interest you qualify for. The best loan rates are usually only offered to those who have good credit score.
Good credit scores lead to lower rates, and give you a better chance of getting the cheapest loans.
If you have bad credit, it'll be difficult to get a low interest loan. But it's still possible to get a bad credit loan.
There may be fewer providers willing to offer you a loan, and those who do will offer higher interest rates than you'd get with a standard loan, and you'll likely be limited to how much you can borrow.
You could also try to get a guarantor loan. That’s when someone – often a family member – guarantees to make your repayments if you can’t.
Not always. If you’re only borrowing a small amount – less than £5,000 – you might find that a credit card is better.
Your ability to do this will depend on your credit limit. Only people with good incomes and a decent credit score can borrow as much as £5,000 on a credit card. But, if that sounds like you, you might be able to get a credit card that gives you 0% interest on purchases.
If you think you’re organised and disciplined enough to pay off your credit card balance within the 0% interest period it could be the best way to borrow. Different credit cards come with different 0% periods — up to as much as 29 months. Alternatively, you could do a balance transfer to another 0% credit card when the 0% period ends.
Yes, you can. You might have to pay a penalty to do so, but check the terms of the loan to see.
There’s also an option to pay overpayments on your loan of up to £8,000 per year without paying any fees for doing so.
If your overpayments come to more than £8,000 across the year, you might have to pay a fee if the bank’s incurred a cost as a result of your early repayment.
It stands for annual percentage rate, which is the interest you pay on the total value of your loan. The lower your APR, the lower your monthly payments.
All the unsecured loans in this comparison offer fixed interest rates so the amount you pay will stay the same.
Applying online can take minutes if you have your details ready. Some secured loans take longer as the lender will need to value your property.
Yes, but because the lender only has to offer their advertised interest rate to 51% of borrowers, if you have bad credit, they can charge you more.
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