Many or all of the products and brands we promote and feature including our ‘Partner Spotlights’ are from our partners who compensate us. However, this does not influence our editorial opinion found in articles, reviews and our ‘Best’ tables. Our opinion is our own. Read more on our methodology here.
Jump to
- Best personal loans and rates November 2024
- What does NerdWallet’s Star Rating Mean?
- How to choose the best personal loan
- Best personal loan lenders: NerdWallet’s top 10
- Best loan rates
- How personal loans work
- Pros and cons of personal loans
- How much can I borrow with a personal loan?
- How to compare loans
- How to apply for a personal loan
- Alternatives to a personal loan
- Best personal loans star rating methodology
- Frequently asked questions about personal loans in the UK
The best personal loans allow you to borrow a sum of money over an agreed period at the lowest interest rate you can get. You then repay this amount, plus interest, usually in monthly instalments until the debt is paid off.
Partner SpotlightNerdWallet has partnered with Monevo
Other loans may be available in the UK loans market that are not included in this service.
Best personal loans and rates November 2024
The figures in our table below show the cheapest loans based on a representative example of up to £10,000 repaid over five years. The interest rate you receive will depend on your financial situation, your credit history, how much you borrow and how long you choose to repay the loan. Only borrow what is essential and if you can comfortably afford repayments.
The loans below are listed by APR, from lowest to highest. Where lenders offer the same representative APR, we’ve ordered the loans by our star rating.
Provider | Representative APR | Loan Amount | Available Term | NerdWallet’s Rating | |
|---|---|---|---|---|---|
 | 6.1%* | £3,000 to £35,000 | 1 to 10 years | 5.0 / 5 | |
 | 6.2% | £300 to £50,000 | 1 to 7 years | 5.0 / 5 | |
 | 6.2% | £1,000 to £25,000 | 1 to 5 years | 4.5 / 5 | |
 | 6.2% | £1,000 to £25,000 | 1 to 7 years | 3.5 / 5 | |
 | 6.6% | £1,000 to £50,000 | 1 to 7 years | 4.5 / 5 | |
 | 6.6% | £1,000 to £25,000 | 1 to 8 years | 3.5 / 5 | |
 | 6.9% | £1000 to £25,000 | 1 to 5 years | 3.5 / 5 | |
 | 6.9% | £1,000 to £35,000 | 2 to 7 years | 3.5 / 5 | |
 | 8.7% | £1000 to £25,000 | 1 to 7 years | 4.0 / 5 | |
 | 9.9% | £1,000 to £35,000 | 1 to 7 years | 3.5 / 5 |
* People with a Clubcard receive a preferential rate – the representative APR for non-members is 6.5% for the same amount and term.
A loan from John Lewis Money is provided by Zopa Bank.
Missed or late payments can lead to increased debt and negatively impact your credit rating.
Important information: APR is checked weekly with data supplied by the independent financial information service Defaqto. We haven’t included products with limited availability, for example they are only available to existing customers or limited solely to homeowners. We aim to provide accurate information but prices, terms and conditions of products and offers can change, so double-check first. Our Star Ratings do not consider the product provider’s lending rates and therefore do not reflect how much it costs to borrow from the reviewed brand. Loan rates can be dependent on your personal circumstances and specific loan requirements. Representative examples are based on information from the lender and are not necessarily based on the same loan amount or loan term.
How to choose the best personal loan
The best personal loan for your situation often depends on:
- how much you need to borrow
- the length of time you need to repay the loan over
- how much you can afford to repay each month
- your credit history
Lenders that get our top ratings usually offer flexibility around the amount you can borrow, offer a range of options to pay it back over and have a good range of customer support options. They may also have a fairly pain-free application process, with a speedy decision and payout.
For example, you could receive an instant decision from Tesco Bank and have the money in your account within 24 hours. You can take out a joint loan with TSB, which isn’t an option that’s offered by all of the lenders we’ve reviewed.
When searching for the best personal loan lenders, look for the ones that offer the best rates and have a good NerdWallet star rating.
If you have a less-than-perfect credit score, there are specialist loans for bad credit that may be an option to consider. But it may be worth seeing if you can improve your credit score before applying, as this could help you get accepted for a loan and access lower rates of interest.
How to use APR to compare loans
To help you compare the best personal loan deals, lenders need to display the cost of a loan as a percentage, known as the annual percentage rate (APR). This represents the yearly cost of borrowing money, taking into account the interest rate and any standard fees. You can compare loans by APR to find the cheapest one that suits your needs.
It’s important to consider the APR alongside other features of a loan to decide if it’s right for you. However, be aware that your personal APR could be higher, lower or the same as the advertised rate. The advertised APR – known as the representative APR – is the rate that at least 51% of applicants will receive. This means that 49% of applicants could receive a different rate.
Checking your eligibility using a loan comparison service can show you the loan deals you’re likely to qualify for and the loan rate you’re likely to receive. You’ll need to enter a few details such as your income and employment status to get a personalised quote.
What does NerdWallet’s star rating mean?
We evaluate and review a number of the UK’s personal loan lenders and rate their loans based on 20 of the features that customers have told us are most important. These include:
- payment flexibility
- the ease of the application process
- how quickly you could receive the money
- the customer support available
We regularly check the personal loans market and update our table and the star ratings as needed. This means that when comparing the best personal loan deals available, our star ratings help you to work out which lenders score well for a range of product features.
However, our star ratings don’t consider the APR offered by the lender and don’t reflect how much it costs to borrow money.
Sam Bromley, Lead Writer and Loans Expert at NerdWallet
What Our Nerds Say
“It’s a good idea to only apply for loans that you’re confident of getting, because making multiple credit applications in a short space of time can damage your credit score. You can feel confident by checking your eligibility before applying – checking your credit score also gives you an idea of how a lender may view your application.”
Best personal loan lenders: NerdWallet’s top 10
We’ve assessed 42 loan products in the UK and this is our roundup of the best of those, ordered by representative APR. Where two lenders offer the same representative APR, the loans are ordered by our star rating. Representative APR does not factor into our star rating methodology. There are other loans available on the market not included in our roundup, and it does not include loans that are only available to existing customers. Find out how we use the term ‘best’ and our guide to star ratings.
The Representative APR is provided to help you compare loans by cost and is not factored in the star rating methodology.
Tesco Bank Personal Loan
1 to 10 years
£3,000 to £35,000
6.1%*
Yes
Representative APR 6.1%*. Based on a loan of £10,000 over 60 months at an interest rate of 5.9358% p.a. (nominal). Monthly repayments of £193.02. Total amount payable £11,581.20. Maximum APR: 34.5%.
- Must be a UK resident
- Must be aged 18 or over
NerdWallet's Review Summary
A Tesco Bank loan scores well for its application process and the flexibility it offers around repayments. For more details, read NerdWallet’s Tesco Bank Loan Review.* People with a Clubcard receive a preferential rate – the representative APR for non-members is 6.5% for the same amount and term.
Tesco Bank personal loan key features:
- Longer repayment periods are available when compared with other lenders we’ve reviewed. While paying back over a longer period lowers your monthly repayments, you’ll pay more interest overall.
- You can choose your payment date when applying.
- It’s possible to defer your first payment by two months, but choosing this option means the loan will cost more.
| Amount borrowable | £3,000 to £35,000 |
| Term length | One to 10 years |
| Time to get a decision | Instant |
| Time to receive funds once approved | 24 to 48 hours |
| Need to have an account with the provider? | No |
| Customer support | Phone, mobile app, social media |
NerdWallet's Pros & Cons
Pros:
- Joint loans are available.
- There are multiple ways to contact Tesco Bank for help and support.
- Tesco Clubcard holders could get preferential rates.
Cons:
- There are interest charges if you pay your loan back early.
TSB Personal Loan
1 to 7 years
£300 to £50,000
6.2%
Yes
Representative APR 6.2%. Based on a loan of £7,500 over 60 months at an interest rate of 6.03% p.a. (fixed). Monthly repayments of £145.1. Total amount payable £8,706. Maximum APR 39.9%.
- Must be aged 18 or over.
- Must be a UK resident.
- Must have a TSB current account (for more than 3 months) to apply for loans of £300 to £50,000, if not, the amounts available are £1,000 to £25,000.
- Must have an annual income of at least £10,200
NerdWallet's Review Summary
TSB’s loan scores well for its application process, with eligibility criteria clearly displayed on its website, and it offers a good level of flexibility. For more details, read NerdWallet’s TSB Loans Review.TSB personal loan key features:
- You can access customer support in-branch and over the phone, and TSB is responsive on social media.
- It’s possible to choose your payment date when applying.
- If you want to apply for a loan with someone else, TSB offers joint applications.
| Amount borrowable | £1,000 to £25,000 (£300-£50,000 if have TSB current account) |
| Term length | One to five years (three months to seven years if have TSB current account) |
| Time to get a decision | Instant |
| Time to receive funds once approved | One working day (same day if have TSB current account) |
| Need to have an account with the provider? | No |
| Customer support | Phone, branch, social media, app, chat (in-app only) |
NerdWallet's Pros & Cons
Pros:
- You can ask to change your payment date.
- TSB current account holders can apply for smaller and larger loans.
- You can get a joint loan.
Cons:
- If you’re not already a TSB customer, you may not get the money in your account until the next working day.
- TSB charges interest if you want to pay off your loan more than 90 days before its end date.
Santander Personal Loan
1 to 5 years
£1,000 to £25,000
6.2%
Yes
Representative APR 6.2%. Based on a loan of £10,000 over 60 months at an interest rate of 6.2% p.a. (fixed). Monthly repayments of £193.47. Total amount payable £11,608.20. Maximum APR 26.9%
- Must be 21 or over and live in the UK permanently.
- You must have a regular yearly income of £10,500+ for loans up to £19,999, or £20,000+ for loans between £20,000 and £25,000
- You must be on the electoral roll and live permanently in the UK
- Must not have been declared bankrupt, or had a CCJ or an IVA within the last 6 years
NerdWallet's Review Summary
Eligibility criteria for Santander’s loan are clearly displayed on its website, and you can apply for a joint loan. However, Santander’s application process can be lengthy compared to other lenders we’ve reviewed. For more details, read NerdWallet’s Santander Loan Review.Santander loan key features:
- You can choose your payment date when applying.
- It’s possible to get a joint loan, if you’d like to apply with someone else.
- Santander has a dedicated X (formerly Twitter) account to help with queries, which is actively monitored by customer service agents.
| Amount borrowable | £1,000 to £25,000 |
| Term length | One to five years |
| Time to get a decision | Instant (five minutes) |
| Time to receive funds once approved | Two working days after you enter a code online, sent by first-class post |
| Need to have an account with the provider? | No |
| Customer support | Phone, live chat, branch, app, social media |
NerdWallet's Pros & Cons
Pros:
- You can apply for a joint loan.
- You could get a decision on your application within minutes.
Cons:
- It could take up to two working days to get the funds in your account.
- Santander can apply interest charges if you pay off your loan early.
NerdWallet has partnered with Monevo who will check your eligibility.
M&S Bank Personal Loans
1 to 7 years
£1,000 to £25,000
6.2%
No
Representative APR 6.2%. Based on a loan of £10,000 over 60 months at an interest of 6.2% p.a. (fixed). Monthly repayments of £193.47. Total amount payable £11,608.20. Maximum APR 22.9%
- Must be over 18
- Must be a UK resident
- Must have an annual income of at least £10,000
NerdWallet's Review Summary
You could get an instant decision when you apply for an M&S Bank loan, but you may have to wait for up to five working days to get the funds. For more details, read NerdWallet’s M&S Bank Loan Review.M&S Bank loan key features:
- You can defer your first repayment for up to three months with an M&S Bank loan, but this means the loan will cost more overall.
- You can apply for a loan with a term of up to seven years, but keep in mind that longer terms mean that you’ll pay more interest.
- It’s possible to get an instant decision, although it could take three to five working days for you to get your money.
| Amount borrowable | £1,000 to £25,000 |
| Term length | One to seven years |
| Time to get a decision | Instant |
| Time to receive funds once approved | Three to five working days |
| Need to have an account with the provider? | No |
| Customer support | Phone, online, social media |
NerdWallet's Pros & Cons
Pros:
- You can defer the repayment start date by up to three months.
- You can change the monthly repayment date (but only twice per year).
- There are multiple ways you can contact M&S Bank – by phone, email, live chat and online banking.
Cons:
- You may need to pay interest charges to pay off your loan early.
- It can take between three and five working days to get the loan in your account.
- Joint loans are not available.
Halifax Personal Loan
1 to 7 years
£1,000 to £50,000
6.6%
Yes
Representative APR 6.6%. Based on a loan of £10,000 over 48 months at an interest of 6.41% p.a. (fixed). Monthly repayments of £236.73. Total amount payable £11,363.04. Maximum APR 29.9%.
- Must be aged 18 or over.
- Must live in the UK (excluding the Channel Islands and the Isle of Man).
- Must be in paid employment or have a regular income.
- Must not have a history of bad credit, such as bankruptcy or CCJs.
- Must have a Halifax current account to apply for up to £50,000, if not, the maximum amount is £25,000.
NerdWallet's Review Summary
Halifax scores well for its application process – you could get an instant decision and have the money in your account within two hours. For more details, read NerdWallet’s Halifax Loan Review.Halifax loan key features:
- Halifax says that you should have the money in your account within two hours.
- Existing Halifax customers can make a joint application, and could apply for a higher loan amount.
- It’s possible to choose your payment date when applying for a loan.
| Amount borrowable | £1,000-£25,000 (up to £50,000 for Halifax customers) |
| Term length | One to seven years |
| Time to get a decision | Instant |
| Time to receive funds once approved | Within two hours |
| Need to have an account with the provider? | No |
| Customer support | Phone, branch, app, social media |
NerdWallet's Pros & Cons
Pros:
- You could get the money in your account within two hours.
- Halifax current account holders are eligible to borrow more.
Cons:
- Halifax applies interest charges to settle your loan early.
- Only Halifax customers can apply for a joint loan.
HSBC Personal Loan
1 to 8 years
£1,000 to £25,000
6.6%
Yes
Representative APR 6.6%. Based on a loan of £10,000 over 60 months at an interest rate of 6.6% p.a. (fixed). Monthly repayments of £195.23. Total amount payable £11,713.96. Maximum APR 22.9%.
- Must be over 18 and a resident of the UK.
- Must have an annual income/pension before tax of £10,000 or more.
- Must have a bank or building society account with a Direct Debit facility.
NerdWallet's Review Summary
HSBC offers loan terms of up to eight years, which is longer than some other lenders we’ve reviewed. Longer loan terms may mean lower monthly repayments but you’ll pay more in interest overall. For more details, read NerdWallet’s HSBC Loan Review.HSBC loan key features:
- If you’re an HSBC current account holder, the application process should be a lot quicker.
- You can apply for a loan with someone else as part of a joint application.
- There’s a range of customer support options available.
| Amount borrowable | £1,000 to £25,000 (up to £50,000 for HSBC Premier customers) |
| Term length | One to eight years |
| Time to get a decision | Two to five working days (instant for existing HSBC current account customers) |
| Time to receive funds once approved | Three working days (instant for HSBC current account customers) |
| Need to have an account with the provider? | No |
| Customer support | Phone, branch, live chat (if using the app or online banking), social media |
NerdWallet's Pros & Cons
Pros:
- You can apply for a joint loan.
- HSBC current account holders could get their money quicker (and Premier account holders could borrow more).
- You can change your repayment date after you’ve made your first monthly repayment.
Cons:
- HSBC applies interest charges of up to two months to pay off your loan in full.
- It could take several days to get a decision on your application and receive your loan if you’re not an HSBC customer.
Virgin Money Personal Loan
1 to 5 years
£1000 to £25,000
6.9%
No
Representative APR 6.9%. Based on a loan of £7,500 over 60 months at an interest rate of 6.9% p.a. (fixed). Monthly repayments of £147.45. Total amount payable £8,846.69. Maximum APR 28.9%.
- Must be over 18 and have lived in the UK for the last 3 years
- Must have an income and a UK bank or building society account
- Must have a good credit history, not be bankrupt or have any County Court Judgements (CCJ) or decrees
NerdWallet's Review Summary
Virgin Money offers a speedy application process, but it’s not very flexible when it comes to making your repayments compared to other lenders we’ve reviewed.Virgin Money loan key features:
- Virgin Money’s application process is fast – you could get an instant decision and receive the money in two hours.
- Virgin Money has in-person branches, however these are in limited locations across the UK.
- You can contact Virgin Money over the phone and social media.
| Amount borrowable | £1,000 to £25,000 |
| Term length | One and five years |
| Time to get a decision | Instant |
| Time to receive funds once approved | Two hours (next working day latest) |
| Need to have an account with the provider? | No |
| Customer support | Phone, social media, in-branch (limited locations) |
NerdWallet's Pros & Cons
Pros:
- You could get an instant decision on your application.
- You could receive the money in two hours, with Virgin Money saying it will be the next working day at the latest.
- Existing customers may be able to borrow more over a longer period. However, you should only apply for what you need.
Cons:
- You can’t choose your payment date when you apply.
- There are larger loan options, and longer terms, available elsewhere.
- Virgin Money’s branches are in limited locations across the UK.
Novuna Personal Loan
2 to 7 years
£1,000 to £35,000
6.9%
No
Representative APR 6.9%. Based on a loan of £7,500 over 60 months at an interest rate of 6.9% p.a. (fixed). Monthly repayments of £147.44. Total amount payable £8,846.40. Maximum APR 36.4%.
- Must be a permanent UK resident and have been living in the UK for at least 3 years
- Must be aged 21 or over and be in permanent paid employment, self-employed or retired with a pension
- Must have an annual income of at least £10,000
NerdWallet's Review Summary
Applying for a loan from Novuna Personal Finance is a slick process, although it can take a couple of days to get the money paid into your account. A lack of repayment flexibility lets it down compared to other lenders we’ve reviewed.Novuna loan key features:
- It’s possible to contact Novuna by email, which isn’t an option with many lenders we’ve reviewed.
- It can take up to two working days for you to receive your loan, although Novuna says it should usually be quicker than this.
- Novuna has a mobile app that you can use to manage your loan.
| Amount borrowable | £1,000 to £35,000 |
| Term length | One and seven years |
| Time to get a decision | Instant |
| Time to receive funds once approved | Within two working days |
| Need to have an account with the provider? | No |
| Customer support | Phone, email, social media |
NerdWallet's Pros & Cons
Pros:
- There are a range of options for speaking to customer service.
- Straightforward application process and you could get an instant decision.
Cons:
- You can’t choose your payment date when you apply.
- The stated 48 hours it may take to get your funds is longer than other lenders we’ve reviewed.
MBNA Personal Loan
1 to 7 years
£1000 to £25,000
8.7%
No
Representative APR 8.7%. Based on a loan of £10,000 over 48 months at an interest rate of 8.37% p.a. (fixed). Monthly repayments of £245.88. Total amount payable £11,802,24. Maximum APR 29.9%.
- Must be 18 or over and a UK resident (except for the Channel Islands and Isle of Man)
- Must be in paid employment or have a regular income. Those in full-time education are not accepted
- Must not have been declined for credit in the last month or have a history of bad credit
NerdWallet's Review Summary
Compared with some lenders we’ve reviewed, an MBNA loan has a fast application process – you could get an instant decision, and have the funds in your account within two hours.MBNA loan key features:
- You can apply for a loan of between £1,000 and £25,000, which is in line with many lenders we’ve reviewed.
- It’s possible to choose your repayment date when applying for a loan and change it during the loan term.
- You can use a mobile app to manage your loan.
| Amount borrowable | £1,000 to £25,000 |
| Term length | One and seven years |
| Time to get a decision | Instant |
| Time to receive funds once approved | Within two hours |
| Need to have an account with the provider? | No |
| Customer support | Phone, social media, live chat (if using the app) |
NerdWallet's Pros & Cons
Pros:
- MBNA has a quick application process.
- There are several options for contacting customer support.
Cons:
- Larger loans are available elsewhere, although you shouldn’t apply for more than you need.
- Live chat is only available if you’re using the mobile app.
John Lewis Money Personal Loan
1 to 7 years
£1,000 to £35,000
9.9%
No
Representative APR 9.9%. Based on a loan of £10,000 over 60 months at an interest of 9.9% p.a. (fixed). Monthly repayments of £209.91. Total amount payable £12,594.46.
- Must be aged 20 or over
- Must be a current UK resident with 1 year of address history in the UK
- Must be employed, self-employed or retired with a pension
- Must have an income of at least £12,000 per year (before tax)
Best loan rates
The best loan rate advertised by representative APR is 5.9%, according to the independent financial product research firm Defaqto on 12 November 2024. However, it’s only available to HSBC Premier account holders.
The best loan rate that has wide availability is 6.1% offered by Tesco Bank. You have to be a Clubcard holder, but it’s free to get a Clubcard. Nationwide also advertises a loan rate of 6.1%, but you can only take out a Nationwide loan if you have a current account with the provider.
The table below shows the lowest loan interest rates by APR over different amounts and terms. The representative APR is based on a loan of up to £10,000 repaid over five years.
Best loan rates this week
| Loan size and term | Best interest rate this week (as at 12 November 2024) | Best interest rate last week (as at 5 November 2024) | Week-on-week change |
|---|---|---|---|
| £1,000 (over 24 months) | 9.9% | 9.9% | No change |
| £3,000 (over 36 months) | 9.9% | 9.9% | No change |
| £5,000 (over 36 months) | 7.2% | 7.2% | No change |
| £10,000 (over 60 months) | 5.9% | 6.1% | -0.2% |
| £25,000 (over 60 months) | 5.9% | 6.1% | -0.2% |
Source: Defaqto. The rates above are the lowest available for the listed example loan sizes and terms as at 12 November 2024, based on 42 products. This table is checked and updated weekly.
What interest rate could you receive?
The Annual Percentage Rate (APR) shows you how much it would cost to borrow money over one year, combining interest and fees that the lender charges.
When you search for credit, providers need to give a representative APR to allow you to compare different products on a like-for-like basis.
However, the best loan rates will only be available to some customers. The rate you’re offered when applying for a loan will depend on multiple factors, such as your credit history, income and pre-existing level of debt.
Do larger loans have cheaper loan interest rates?
Smaller loans often come with a higher interest rate than larger loans. Most lenders have a loan calculator you can use to get an idea of the interest rate for a particular amount, the monthly repayment amount and the total cost of borrowing.
However, this doesn’t mean that you should borrow more than you need – it’s likely that the total cost of borrowing for a larger loan would still be more, even if the rate is cheaper. And remember that the interest rate you get will depend on your particular circumstances.
What is the average loan interest rate?
The Bank of England works out average quoted interest rates using rates advertised to borrowers, expressed in terms of APR. The Bank takes the whole market of UK financial institutions into account.
When comparing loans it can be useful to check the rate against both the best loan rates above and the average loan rates below, to see whether you’re getting a good deal.
The table below shows the latest available average quoted interest rates over different example loan sizes.
Average quoted monthly interest rate:
| Loan size | October 2024 | September 2024 | Month-on-month change |
|---|---|---|---|
| £3,000 | 17.05% | 17.59% | -0.54% |
| £5,000 | 10.58% | 10.9% | -0.32% |
| £10,000 | 6.58% | 6.58% | No change |
| £25,000 | 6.88% | 6.89% | -0.01% |
Source: Bank of England’s quoted household interest rates for personal loans.
Interest rates advertised to borrowers for £3,000 loans experienced another drop between September and October 2024, while average interest rates for larger loan sizes saw smaller decreases.
The general trend for average interest rates for smaller loan sizes does appear to be downward, while both £10,000 and £25,000 average loan interest rates have been relatively stable for several months.
The Bank of England voted to cut the base rate of interest from 5% to 4.75% on 7 November.
The base rate of interest can affect how much lenders charge for loans, mortgages and other forms of credit. While mortgage rates tend to follow the base rate more closely than loan rates, the reduction could still mean that lenders will start advertising lower interest rates on loans over the coming months.
The latest effective interest rate on new personal loans
The Bank of England works out a monthly effective interest rate based on the average of the actual interest lenders earn, not the advertised interest rates.
According to the Bank of England’s latest Money and Credit report, which covers borrowing over September 2024, the effective interest rate on new unsecured personal loans to individuals in September fell to 8.69%, a decrease of 0.58 percentage points from 9.27% in August.
The Bank of England’s next Money and Credit report, which covers October, will be released on 29 November 2024.
The Bank of England works out effective interest rates based on a survey it sends out to 26 of the UK’s largest financial institutions, including banks and building societies.
How personal loans work
When you take out a personal loan, you receive the money as a lump sum from your chosen lender. You then need to repay this amount, plus the interest the lender charges, usually in monthly instalments over the agreed period.
You can use a loan for many purposes, including to pay for a holiday, a wedding, a new car, home improvements, or an emergency expense. You can also use it for debt consolidation, although it’s important to be aware of the costs this may involve.
The interest rate you receive depends on several factors, including the amount you want to borrow and your credit score.
Lenders typically charge a higher interest rate if you have a lower credit score, because you’re seen as riskier to lend to than someone with a better credit history.
The APR tells you the cost of your loan, including interest and standard fees. Bear in mind that the personal APR you receive may differ from the advertised representative APR.
The representative APR is designed to help you see the typical cost of a loan, but you’re not guaranteed to receive this rate. Only 51% of applicants who are approved for a loan will receive the advertised representative APR (or lower), so you could be charged more or less than this.
Pros and cons of personal loans
As with any time you take out credit, there are pros and cons to getting a personal loan.
Advantages of personal loans
- You can pay for goods or services upfront and spread the cost over a longer period.
- You can apply for a loan and often receive the money relatively quickly.
- You may be able to borrow money at a lower interest rate than some other options.
- Loan rates and monthly repayments are normally fixed, so the amount you pay each month won’t change.
Disadvantages of personal loans
- A personal loan can have a higher interest rate than some other finance options, especially if you have a less-than-perfect credit score.
- It may not be the best option if you want to borrow only a small sum of money (read more about alternatives to a personal loan).
- There’s a limit to how much you can borrow.
- Missed and late repayments can harm your credit score.
How much can I borrow with a personal loan?
You can typically borrow between £1,000 and £25,000 with an unsecured personal loan, but some lenders may offer larger loans.
Your credit score and financial situation will also determine how much you can borrow. If you have an excellent credit score and a higher income, you’re likely to be able to borrow more than someone with a poorer credit history and a lower income.
Even if you are eligible for a larger loan, you should only borrow the amount you need and that you can afford to repay. You can use our personal loan calculator to get an estimate of how much you can afford to borrow.
How to compare loans
Comparing loans from a range of lenders can improve your chances of finding the best loan for your requirements, at the lowest loan interest rates.
Some important points to look out for when you compare loans are:
- the loan amounts and terms available, for example a £5,000 loan or £10,000 loan
- the annual percentage rate (APR)
- how quickly you could get the loan in your account
- if there are any extra fees, or charges for early repayment
- whether the customer support available suits your situation (some lenders are online-only, for instance)
You should also check the eligibility criteria of each lender to make sure you meet their basic income and credit history requirements, for example.
With any loan, it’s best practice to only borrow what you need and pay it back as quickly as possible, based on what you can comfortably afford to repay each month. Paying the loan back over the shortest time possible costs less than paying it back over a longer time frame.
How to apply for a personal loan
You can apply for a personal loan online with many lenders. But before submitting a formal application, you can often check your eligibility with the lender first.
Checking your eligibility involves a soft credit check, which doesn’t affect your credit score, whereas applying for a loan usually involves a hard credit check. Hard searches are visible on your credit report and affect your credit score.
You can also use a loans eligibility service to do a soft search across multiple lenders to find out how likely it is you’ll be offered several different loans, without affecting your credit score. However, the lender’s final decision will only come when you apply for the loan.
When you apply, you will need to enter information such as your name, address, income and employment information to help lenders decide on your application.
The lender will also usually check your credit history to see if you have been a reliable borrower in the past.
» MORE: How to apply for a loan
Alternatives to a personal loan
A personal loan isn’t the only option if you need to borrow money. Depending on your situation and your individual requirements, there are alternatives you could consider.
If you only need to borrow a small sum over a short period, a credit card could be worth considering. For example, using a 0% interest purchase credit card or balance transfer credit card may mean you can borrow money without paying any interest, as long as you pay off the card in full by the end of the 0% period and stick to the terms of your credit agreement.
If you’re struggling to get an unsecured loan or you want to borrow a larger amount, you could consider a secured loan. These loans use your property as security, which the lender can repossess if you don’t repay the loan. This reduces the risk for the lender, but you risk losing your property if you can’t make repayments.
A guarantor loan is a type of personal loan where a friend or family member agrees to act as guarantor and repay the loan if you don’t manage to. The guarantor can make it easier for someone to get accepted for a loan as the risk to the lender is reduced.
If you have a current account with an arranged overdraft and only need to borrow a small amount for a short time, this could be an alternative to taking out a loan. However, make sure you don’t go over your agreed overdraft limit or you could face high interest charges.
If you plan to take out a loan to buy a car, car finance may be an option. This is when the loan is secured against the vehicle and you make payments each month. There are several types of car finance available, including hire purchase (HP) and personal contract purchase (PCP).
If you’re considering borrowing from friends and family, only ask someone you trust and put the terms of the loan in writing to minimise the chances of disagreement later on.
By remortgaging and borrowing more than you currently owe, you can raise the money for home improvements, for example. However, this means you would owe more on your mortgage and you should consider any early repayment charges or other fees you may need to pay.
If you’re searching for a loan on benefits, your available options for borrowing are likely to be expensive. It’s important to make sure that you’re claiming all the financial help you’re entitled to first.
For example, are you claiming all the support with childcare costs you may be eligible for? And if you need money urgently, you may be eligible for an emergency loan or grant.
Services such as Citizens Advice, StepChange and Turn2us can give you free advice about what benefits you may qualify for and how to claim them.
Best personal loans star rating methodology
NerdWallet has evaluated and reviewed several personal loan lenders.
We considered 20 data points for each loan, based on the criteria that matter most to customers, scoring them on loan features, flexibility, application process and availability of customer support, among other factors. This information was gathered from each lender’s website, company representatives and independent financial product analyst Defaqto. In addition, we regularly add new brands and our editorial team review them against the same criteria for consistency and accuracy.
Using the same data across all products and features we were able to create star ratings, presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’.
Frequently asked questions about personal loans in the UK
You can use a personal loan to pay for a variety of different purposes, including:
- a new car
- home improvements
- holidays
- weddings or other special occasions
- large purchases, such as a new household appliance
- paying off and consolidating existing debt
Before taking out a personal loan to consolidate your debts, make sure you consider the costs involved. Using a personal loan with a low interest rate to pay off debt with a higher interest rate could save you money, but make sure you consider any early repayment fees and how much you would end up paying overall. Also consider when consolidating debts borrowers often extend the term of the loan. This can mean the loan costs you more overall.
You typically can’t use a personal loan for any business purposes, share dealing, gambling, or buying property, for example.
In most cases, comparing and checking your eligibility for loans won’t affect your credit score. Providers will typically run a soft credit check during this process, which doesn’t leave a mark on your credit history. But, before submitting any application, make sure you know exactly what checks the provider will do, as a hard credit check will be recorded on your credit file.
If your credit score is good and you have a stable income, getting a personal loan can be fairly straightforward. But if your score is less than perfect and you’re struggling to get a standard loan, there are specialist bad credit lenders that may consider your application. However, they are likely to charge a higher interest rate.
Alternatively, you could consider a guarantor loan or a secured loan. They may be easier to get approved for as the lender has the extra reassurance of the guarantor or the property or asset used as security. However, if you don’t repay these loans, the guarantor would need to step in or, if you have a secured loan, the lender could repossess your property. You should evaluate the full range of products available to figure out which one best meets your requirements.
There isn’t a specific credit score that you need to get for a personal loan. Lenders will have their own requirements and will base their decision on your income and overall financial situation, not your score alone. Some lenders will require you to have a good credit score to qualify for a loan, but other lenders may accept applications from people with less-than-perfect credit scores.
The best advertised personal loan rates are usually available to those with the best credit ratings. Lenders advertise rates as a representative APR, so your actual rate could be higher than this.
The interest rate you are charged on a loan will depend on your credit score, as well as the amount you borrow. Larger loans often come with a lower rate of interest, but this shouldn’t be a reason to borrow more than you need as the total cost of borrowing could be more.
Review methodology
At NerdWallet UK, we base our reviews and our ‘Best’ pages on the results of surveys we undertook about what was important to people who use these products. This allows us to look at products impartially of any commercial arrangements we have and fairly rate the products on the same set of criteria.
Best means our ‘Best’ and is based only on what products we have aligned to our surveys, which form the basis of our reviews and ratings. This means that there will be other products on the market that we have not included in our ‘Best’ pages. Best does not mean it’s best for you, nor does it mean the ‘cheapest’.
Our reviews may display lenders’ rates. This additional information has not been included in our evaluations but is still very important when choosing a product. Rates offered can depend on circumstances, amount and term. Always check details before proceeding with any financial product.
Product details reflect the information that was available at that time but may have changed since. We strive to give you a review on as many products as possible, but there will be products not included on the market. The review is our opinion, but it does not constitute advice, recommendation or suitability for your financial circumstances.
While we try to provide you with accurate information, the providers can change the terms of their products at any time, therefore it is advisable to check the terms before you proceed.
You can view our full review methodology here.
About the Author
Latest articles
Emergency Loans, Grants and Other Support if You Need Money Urgently
Short Term Loans for Bad Credit: Should I Get One?
by Rhiannon Philps