A simples guide

Low APR loans

If you’re looking for the best deal you can find on a personal loan, chances are you’ll looking at loans with low APR.

Of course, there’s no such thing as the perfect loan that suits absolutely everyone; the right loan for you is the one that best fits your requirements and circumstances. That’s where we can help you find a low APR loan that fits the bill. 


Best Loans with Low APR

The good news is that loan rates are at an all-time low. In just the last two years, the best loan rates have dropped from 7.5% to just 3.3%. This is because lenders are trying to get the attention of potential borrowers. Yipee! The bad news is that up to 90% of potential borrowers are being turned away because of their credit score. So don’t start celebrating the moment you see a great rate. Lenders are frequently offering borrowers a much higher rate than the one advertised, or simply turning them away altogether. 

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How do I choose the right loan?

For many people, loans with the lowest APR could work best for you. APR is the annual percentage rate. Unlike interest rates, APR takes into account all of the associated costs with financing the loan to give you an idea of what you can expect to pay back in a year. While some loans might have attractively low interest rates, if it is compounded daily or comes with some additional fees it could end up costing you a quite a bit more. APR is usually the thing to keep an eye on. The best loan for you could be the one with the lowest APR as both the amount and the repayment rate will be taken into account. 

Steady on, it’s only representative!

Don’t forget: advertised loan and credit card rates are only representative. They can give you an idea, but there’s no guarantee what you’ll actually end up paying.APR is tailored to your unique circumstances and history. Only 51% of successfully applicants get those rates, and 49% may end up with a more expensive loan than the one that caught their eye to begin with. Unfortunately, the only way to find out whether you’ll be able to get the advertised rate is to apply, and this leaves a search on your credit file, which can hinder your ability to get credit in the future. So, it’s worth making sure the loan you’re going for looks promising before you apply. 

How can I lower my APR?

There are a couple of things you can do to get a lower APR, which can save you a few bob. Generally speaking, a low APR indicates lower interest rates and low associated fees.

- Check your credit report.Lenders will be more likely to lower the APR on a personal loan if you have good credit. Good credit indicates you’re at lower risk from defaulting on the loan. Borrowers that seem high-risk will usually have to take higher interest rate loans, although low APR loans with bad credit are still possible.

- Extend the term of your loan.Another way of lowering your APR is by extending the term of your loan. This will drive down your monthly repayments and mean you pay less over the course of the year. Of course, it also means you’ll be paying your loan back for longer and mean you end up shelling out more in the long run, so be careful and don't be seduced by lower rates over a longer period. The golden (and flexible) rule of borrowing is to borrow as little as possible and pay it back as quickly as possible!

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Budget, budget, budget

Even with a low APR, borrowing should always be carefully budgeted for. It’s easy to be a little too optimistic when it comes to these things, forgetting the odd expense here and there. You don’t want to put yourself you under unnecessary financial stress and strain in the future.

How to get a loan with low APR

Looking for the right loan can seem like a never-ending quest without a map. There are hundreds of loan lenders out there – which is right for you? Luckily, with comparethemarket.com you can easily compare all the relevant information such as provider, representative APR, and total amount repayable, as well as how much it would cost you per month. All we need to know is how much you want to borrow, and how long you’ll need to repay the loan. Simples as that.