A simples guide

Low interest loans

If you’ve already been Googling loans with low interest, you’ll know there’s a mind boggling number of providers out there, all offering different interest rates, terms and deals. If you want to narrow down the list, you’ll need to think about what kind of loan you need.

Low interest rate loans can broadly be divided into two categories, secured and unsecured. So let’s take a look at the difference between them so you can work out which might be best for you. 


Secured loans

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, like your house or car. If you default on the payments, they can sell your asset to clear the debt you owe. 

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 - 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.

A word of warning: If you go down this route and default on your payments, you could lose your home, so you’ll need to have all your finances in order. 

coins and piggy bank
coins and calculator

Unsecured loans

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 loan is worked out from your credit score.

You can borrow anything from £1000 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 £7500 - £15,000.


So how do I find the right low interest loan?

We all want the best possible loan. To find a cheap one, you’ll want to look at the APR (Annual Percentage Rate). Choosing a low APR is the easiest way to save money on your repayments.

As a general rule, the more you borrow, the lower the rate. Say you’re charged 9% interest on a £3000 loan, but only 6% on a £7000 loan. It may make sense to borrow the slightly larger amount - say £7,000 instead of £6,500 - to take advantage of the lower rate of interest. 

Can I apply for a low interest loan?

Yes. Loans are pretty accessible at the moment, as interest rates are at an all time low. A price war between lenders has seen rates plummet – to as little as 3.2% a year.

Not only that, but there are loads of bad credit loans available on the market today. So even if you have a bad or non-existent credit rating, getting a low interest rate loan isn’t out of your reach.  

Is a low interest rate loan the best option for me?

Just like credit cards, personal loan deals vary widely. Securing the best term and interest rate can save you a lot of money. But getting the best interest rates doesn’t just depend on who you borrow from, but how much you borrow and for how long.

Low interest rate loans, like any loan, are a commitment. So you also need to think about the following:   

Can you afford the monthly repayments?
- Are your circumstances likely to change in a way that could affect your repayments?
- Will the lender allow you to pay back the loan early?
- Is there an arrangement fee?
- Can you defer loan payments if you need to?

Using our simple comparison table you can compare low interest rate loans from some of the UK’s leading loan providers. Not only will this save you hours trudging up and down the high street, or on the phone to providers, but using our best buy table, you can compare loan providers, products, representative APRs, total amount repayable and monthly repayments, to find the low interest loan that’s right for you – in meer-kat seconds!


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