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Personal loans can be used for a multitude of things. Whatever your reason for borrowing, you should look for a product that suits your needs. Suitability depends on many factors. If you’ve spent any time looking for a loan with low interest, you’ll know there’s a mind-boggling number of providers out there, all offering different interest rates, terms and deals. 

Frequently thought questions

So, where do you start? Well, you’re in a good place. We’ve pulled together the answers to some ‘frequently thought questions’ to help provide some of the information you need to decide which is the best loan for you.

What are the best rate loans?

Because everyone’s financial situation is unique, there is no one loan that is best. Only you can understand what it is you need from a loan and from the lender providing the loan. Using our loan comparison service is the best place to start so you can find the best rate loan for your needs.

What should I consider when looking for a low interest loan?

Finding the right loan can be like navigating a minefield. There are hundreds, maybe thousands, of providers and loans out there. Before making a commitment, you should consider the following:

What’s an unsecured loan?

Unsecured loans, also known as ‘personal’ loans are available to anyone with a fair credit score – you don’t have to be a homeowner to apply, as they’re not secured against any assets. You’ll still have to pay the money back, of course, but won’t have to use your house or car to secure your loan. Your suitability for a low interest unsecured loan is worked out from your credit score.

How much can I borrow with an unsecured loan?

You can usually borrow anything from £1,000 to £35,000, with a low interest personal loan, but we’ll let you in on a little secret –the best rates are often available to those that borrow between £7,500 to £15,000.

What is a secured loan?

With a secured loan, also known as ‘homeowner’s’ loan, the loan provider will insist on some sort of security against the money you borrow, usually your house. If you default on the payments, they can sell your asset to clear the debt you owe. That means if you go down this route and default on your payments, you could in the worst case, lose your home. That means it’s vital to have all your finances in order.

How much can I borrow with a secured loan?

With a secured loan, you can borrow anything from £5,000 to £125,000, at a fairly low rate of interest. You then pay back the debt over a 10 to 15 year term.

The amount you borrow, the term and interest rate, will be determined by your equity in your property, your credit history and personal circumstances.

What is APR and why is it important?

APR, or Annual Percentage Rate of charge, is a way of comparing which low interest loan is cheapest. Expressed as a percentage, it is a calculation of interest and has any automatic fees included. The actual APR will differ between lenders and between products. It’s a legal requirement for the APR to be clearly identified.

While APR is a useful tool when comparing financial products, it is vital to look at every aspect of the loan before committing. Read and understand the terms and conditions before signing.

Why do the APR’s on loans vary so much?

The business of providing loans is a competitive one and loan rates are at very competitive levels at the moment. Loan providers are therefore looking to attract customers with their most attractive rates. To get a loan at the lowest APRs however, you’ll need a very good credit history. If you credit history is damaged or you haven’t borrowed before, you may find that you have to pay more.

Generally speaking, the more you borrow, the lower the rate you’ll see quoted. Say you’re charged 9% interest on a £3,000 loan, but only 6% on a £7,000 loan. In such a situation, it may make sense to borrow the slightly larger amount - maybe £7,000 instead of £6,500 - to take advantage of the lower rate of interest but you should only borrow the amount you can afford to pay back as you still have to pay interest on the amount you borrow.

Should I get a loan or a credit card?

That depends on your personal circumstances and your credit rating because there are credit cards available that offer 0% interest on purchases to a certain value. As these cards are usually only available to those with the best credit histories, they won’t be an option for everyone. As the amount is also limited, if you need to borrow a larger amount, a loan may be the most realistic option.

How do I compare low interest loans?

We’ve taken a lot of the headache and hard work out of comparing low interest loans. Our comparison service will compare loan products from leading providers, giving you a view of what it will cost to borrow your chosen amount. If you’re interested in a credit card as an option, the good news is that we compare those too. Both are really simple. We just need a few minutes of your time to give us a few details and we will do the rest. Try it today and see what you could save.

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