Compare £3,000 loans

Whether it’s a leaky roof that just can’t wait or vehicle repairs to get you back on the road, a £3,000 loan could save you a lot of stress. We’ll help you consider your options to decide if a loan is right for you.

Whether it’s a leaky roof that just can’t wait or vehicle repairs to get you back on the road, a £3,000 loan could save you a lot of stress. We’ll help you consider your options to decide if a loan is right for you.

Anelda Knoesen
From the Money team
8
minute read
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Posted 25 MAY 2021

Looking for a £3,000 loan?

You may be planning a kitchen makeover, looking to buy a car or have existing high-interest debts that are draining your bank account - there are many reasons why a boost of £3,000 could come in handy.

But even with a relatively small loan of £3,000, it’s important to budget carefully and make sure you can comfortably afford the monthly repayments.

Whether you have a great or poor credit rating, take your time to shop around and compare loans before taking the leap. Have a good look at your finances and weigh up your options before deciding if a loan is right for you.

Do I really need a loan for £3,000?

Before you begin, it’s worth considering whether you really need a £3,000 loan in the first place. There are alternatives.

Many credit cards offer an interest-free period between 1-30 months on purchases or balance transfers, or both.

A 0% purchase card can help with buying big-ticket items. If you pay back the money before the 0% interest free period runs out, and on time each month, it shouldn’t cost you a penny in interest. 

A card that offers 0% on balance transfers can give you a breather from paying interest on credit card debts. Just be aware that most balance transfer credit cards will charge a transfer fee. And you must make at least the minimum payment on time every month or you could lose the interest-free rate. 

Loans, on the other hand, will charge interest, though current rates are competitive and can be lower than credit card standard interest rates if you have a good credit rating. You also need to consider if you can afford the monthly repayments. 

Should I speak to my lender first?

Yes. If you want to make a partial overpayment, then a 28-day notice period applies. You’ll be charged interest on the full amount you owe for 28 days after you notify your lender of an extra payment.

If you want to pay your loan off in full, you’ll need to ask your lender for an ‘early settlement amount’, which is a recalculation of what you owe based on:

  • what you’ve already paid and the amount you still owe
  • what interest charges apply
  • whether there are any early payment fees.

Your lender’s obliged to give you this figure if you ask for it and to give you at least 28 days to think it over. If you decide to go ahead, you’ll need to pay the outstanding early settlement amount by the settlement date the lender has given you – otherwise it will need to be recalculated.

If you don’t ask the lender for the figure, you may end up paying the wrong amount.

You don’t have to pay off the loan if you decide you’d be better off continuing with your monthly instalments.

How can I choose the right type of £3,000 loan?

Loans usually fall into one of the following categories:

  • Personal unsecured loans. These are usually for smaller amounts of money. Since you’re not using any of your assets to guarantee repayment, you’ll typically pay a higher interest rate than you would with a secured loan.
  • Homeowner secured loans. While secured loans are generally for those borrowing larger amounts of money, they’re available for £3,000 loans too (including £3,000 loans for bad credit borrowers). They typically offer low interest rates but rely on using your home as collateral to guarantee you’ll pay them back. If you can’t, your home can be repossessed. You may also be charged an arrangement fee.
  • Guarantor loans. You can ask a friend or family member to co-sign your loan, which ultimately makes them responsible for the debt. That means they’ll have to pay back the loan if you can’t. Guarantor loans can be a way to get lower interest rates if you have a poor or no credit rating. For example, if you’ve never borrowed before, a lender has no idea how good you’ll be at paying back your loan.
  • Payday loans. These provide a short-term solution to cash shortfalls. They’re unsecured loans, meaning no collateral is required to secure one, and come with very high rates of interest. We don’t offer this type of loan on our site. You’d typically use a payday loan to bridge the gap between the time you run out of money to the time you get paid again. You should think very carefully before applying for a payday loan. If you’re in debt and looking for advice or alternatives to payday loans, the Money Advice Service may be able to help you.
  • Instalment loans
    In a sense, most personal loans are instalment loans. But this term is often used to describe short-term loans with high rates of interest that are paid back in weekly or monthly instalments, unlike payday loans that are paid back in a single instalment.
  • Peer-to-peer loans
    Essentially, you borrow money from individuals on a Financial Conduct Authority (FCA) regulated crowdfunding platform or website, instead of a bank. They’re a popular alternative to traditional high-street loans and could possibly be cheaper if your credit rating is good.

Compare the Market limited acts as a credit broker, not a lender. To apply you must be a UK resident, aged 18 or over. Credit is subject to status and eligibility.

What to think about when choosing your loan

If you decide a £3,000 loan is right for you, there’s a few things you’ll need to think about before you compare. Here’s what to keep in mind:

  • The monthly repayments. Sometimes, even a small amount can make quite an impact when it’s leaving your bank account on a regular basis. Be sure to budget before you take out a loan. Missing payments or even paying late for just one month can negatively affect your credit score, so choose a loan you can afford.
  • The overall amount you’ll repay. The longer you take to repay the loan, the larger the total amount you’ll pay back.
  • The APR. The annual percentage rate shows the cost of borrowing money for a year. But the APRs you see in loan adverts are often ‘representative’. This means that the provider must offer this rate to at least 51% of customers who are accepted for the loan. The APR you’re offered could be higher or lower, depending on your financial history and credit rating.
  • Early repayment penalties. If you’re lucky enough to be able to pay off your loan earlier than expected, some lenders may charge you a fee. Look out for this if you think it’s a possibility.
  • Whether the interest on the loan is fixed or variable. Interest on personal loans is usually fixed, but some secured loans have variable rates of interest, which means your payments could go up and down.

Did you know? 

Loan providers offer a cooling-off period. This is good news if you’re unhappy with your loan arrangement and want to make a swift exit. You’ll have a 14-day cooling off period. If you cancel within that time, you’ll have 30 days to pay back the money you borrowed plus the interest accumulated on the time you had the loan.

How long will it take to repay a £3,000 loan?

A personal unsecured loan for £3,000 could typically be taken out for 1-5 years, depending on the lender.

However, there’s a golden rule when it comes to borrowing money: borrow as little as possible and pay it back as quickly as possible.

Although spreading your debt over a longer period could mean cheaper monthly repayments, the total amount you’ll pay in interest will end up costing you more.

Here’s an example of how much a typical £3,000 loan could cost you over 2 and 3 years:

Initial loan Length of loan APR Monthly repayments Total repayments
£3,000 2 years 8.9% £136.44 £3,274.66
£3,000 3 years 8.9% £94.78 £3,412.11

Can I use a £3,000 loan to clear my other debts?

If you have, say, credit card debts, store card debts and an overdraft that are all charging high interest, you may want to combine them into a single loan with a lower interest rate to reduce the overall amount you’re paying.

In theory, a debt consolidation loan could be easier to manage. It allows you to pay off multiple debts with one payment each month, which could help you take control of your finances.

But a consolidation loan doesn’t mean you’ve cleared your other debts. It’s still a loan and you need to be disciplined about paying it back. If you can’t keep up with your repayments, £3,000 could quickly snowball into even greater debt.

Also think about whether you’d be tempted to start spending on your cards again, effectively building up another lump of debt.

Will I need a credit check to borrow £3,000?

Yes. When you apply for a loan, no matter what the amount, the lender will carry out a ‘hard credit check’ before considering your application.

They’ll look at your credit history to see how you’ve managed your finances in the past and how likely you are to pay back the loan.

Every time you make an application for a loan or credit, a hard credit search will be marked on your credit file.

If you get turned down for a loan, don’t immediately apply somewhere else. Multiple applications look really bad on your credit file and give lenders the impression that you’re desperate for money.

Use our loans eligibility checker to find out which loans you’re most likely to be accepted for before you go ahead and apply. It’s a ‘soft search’, so it won’t be marked on your credit file or affect your credit score in any way. 

I have a poor credit score. Can I still get a £3,000 loan?

A poor credit score doesn’t automatically mean you’ll be refused a loan, but your choices may be limited. You might also be charged a higher interest rate.

Although there are options for those with poor credit, it might be better to try to build up your credit score before applying for a loan. It could take up to six months to improve your credit rating, but it’s worth the wait if it increases your chances of getting your application approved.

Find out how you can build your credit score.

How can I compare loans quickly and easily?

We can make it easier to find £3,000 loan offers from a range of loan providers. Whether you have a high credit rating or a bad credit history, shopping around and comparing offers will help you find a loan to suit your needs and circumstances.

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