The best personal loan rates available to consumers

Consumers looking to take out a personal loan will be pleased with the latest research showing that average rates on £5,000 and £7,500 personal loans have fallen since the start of the year. Meanwhile the average rate on a £10,000 personal loan has remained unchanged.

Our research has found that on 1 January the average rate on a £5,000 loan was 7.2%, which had fallen to 7.1% on 1 July. Meanwhile, the average rate on a £7,500 loan was 4.5% on 1 January, while on 1 July it stood at 4.4%. Those looking to borrow £10,000 will find that the average rate has remained at 4.4%.

Those looking to borrow using a personal loan will find that there are many lenders in our loan comparison chart offering rates below the averages. This means that borrowers can get a personal loan rate from as little as 2.8%. To give an idea of what rates are currently available here we’ve highlighted the lowest rates on loans at £5,000, £7,500 and £10,000 that are available to both new and existing customers.

The lowest rate on a £5,000 loan spread across three years that is available to new and existing customers is Virgin Money’s Virgin Money Personal Loan and Tesco Bank’s Online Personal Loan, both of which offer 3.4% APR. These loans both require monthly repayments of £146.17 and the total costs of the loans are £262.12, resulting in a total repayment of £5,262.12.

MBNA Limited has the next lowest rate on a £5,000 loan to be repaid over three years. Its Personal Loan offers 3.5% APR and requires monthly repayments of £146.39. The total cost of this loan is £270.04, which means borrowers are repaying a total cost of £5,270.04.

The next lowest rate comes from Hitachi Personal Finance, which offers 3.7% APR on its Hitachi Personal Loan. Borrowing £5,000 spread across three years with this rate results in monthly repayments of £146.82. Its total cost of borrowing is £285.52, resulting in a total repayment of £5,285.52.

Consumers looking to borrow a slightly higher amount of £7,500 or £10,000 spread across five years will find that four loans offer the lowest rate on a deal available to new and existing customers.

M&S Bank's Personal Loan, Hitachi Personal Finance's Personal Loan, cahoot's Online Personal Loans and MBNA Limited's Personal Loan all offer 2.80% APR.

For those borrowing £7,500 over five years these loans all require monthly repayments of £133.98. The total cost of borrowing is £538.80, which means borrowers are repaying a total of £8,038.80.

For those looking to borrow £10,000 over the five year term, these loans require monthly repayments of £178.64. The total cost of borrowing is £718.40, which results in a total repayment of £10,718.40.

Although a personal loan is one of the most popular ways to borrow money, there are many different borrowing options available to consumers.

Another popular method of borrowing is using a credit card, which can be a good way to borrow a small amount of money. Consumers planning to borrow via a credit card should consider a 0% purchase credit card, which will not charge interest on purchases made on the card for a pre-set term. Borrowers should aim to repay the debt in full during the interest-free period to avoid being charge interest, which, when applied, can result in credit card borrowers struggling to clear their debt. To compare the best deals visit our 0% purchase credit card comparison chart.

Homeowners looking to borrow a substantial amount of money, usually £20,000 or more, can consider a secured loan. Unlike personal loans, a secured loan requires an asset, usually the borrower’s home, to be put as collateral against the loan. As a result, secured loans are a much risker borrowing option, as if repayments are not kept up to date it can result in the borrower having their home repossessed. This means that secured loans should only be considered by those confident that they can make every repayment. For more information about secure loans visit our secure loans page.