|Minimum Age||21 years|
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|Minimum Age||21 years|
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|Minimum Age||18 years|
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Last updated: 12 April, 2021
The cheapest loans available have a low annual percentage rate (APR). The APR is the rate lenders charge you for taking out a loan with them. It factors in the interest, as well as all the other costs of your loan. By finding the low APR loans, you’ll save money on the overall cost of your borrowing.
Low interest loans are great, but you should search specifically for low APR loans, as these take all the fees into account and not just the interest. This’ll help you find the cheapest loans.
Banks and building societies don’t always offer the cheapest loans, so you should check out all the options before you apply.
There’s a lot more to choosing the right loan than just finding loans with low APR.
There are some decisions you’ll need to make before you start to compare cheap loans. You’ll need to think about what kind of low interest loan you want.
Low interest personal loans come with different benefits and risks. So it’s important to choose the right type for your needs, and then find the best APR loans within that category.
There are lots of types of loans out there, but they all fall into 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.
People look for low interest loans for all kinds of reasons. This could be:
To make a large purchase, like a car
To do home improvements, such as replacing a kitchen
To pay for a wedding
To go on a holiday of a lifetime
To consolidate existing debts.
Whatever you want a loan for, it’s a good idea to find a low interest one.
The length of time you spend paying off your loan is called your loan term.
You should always aim to pay off a loan as quickly as your finances allow. The longer your term, the less chance you have of finding cheap loans.
Although a longer term will mean smaller monthly payments because you’re spreading the debt, you’ll actually pay a lot more interest overall.
That's why it’s wise to choose the shortest loan term that still keeps your monthly payments affordable. Our loan calculator will help you work out how different loan terms affect your monthly payments, and the overall costs of your loan.
You can find low rate loans using the comparison at the top of this page, and then use the loan calculator to find out how much they would cost you.
The bigger your loan, the more likely you are to find the lowest loan rates. But remember that even if you have a low interest loan, a large loan can still make the repayments high. The more you borrow, the higher your repayments will be.
That’s why you shouldn’t borrow more than you need. And you should only ever apply for a loan you can afford to pay back.
No, you won’t necessarily get the representative APR. At least 51% of loan applicants will be offered the APR that’s advertised.
Others may be offered a higher APR, depending on their credit rating. The only way to find out for sure what APR you’ll be offered is to apply for the loan.
How do credit scores impact loans with low APR? When you apply for any form of credit, the lender will do a credit check. That’s when someone checks your financial history in your credit file. The best loan rates are usually only offered to those who have good credit core.
The APR that a lender’s willing to offer will depend on your financial status and credit history. Good credit scores lead to lower rates, and give you a better chance of getting the cheapest loans.
Remember that when you apply for a loan, your credit rating determines whether the lender is willing to offer you a loan, and what rate they’ll offer. It’s your income that determines how much they’re willing to lend you.
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.
However, by comparing bad credit loans you can find a loan with a lower interest rate.
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. Different credit cards come with different 0% periods, but it could be around 20 months. Alternatively, you could do a balance transfer to another 0% credit card when the 0% period ends.
If you’re planning to use a credit card to make a big purchase, you’ll need to check whether the retailer takes credit cards.
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.
Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from lenders regulated by the Financial Conduct Authority. For more information you can also see how our website works.
We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.