Cheapest loan of 4.9% launched by Zopa

The personal loan battle continues with a new market-leading rate from Zopa.

Personal loan rates have fallen again, with the cheapest on offer for loans between £7,500 and £15,000 now coming from Zopa at 4.9%.

A market-leading rate from Zopa

If you borrowed £10,000 from Zopa over 60 months you would pay back a total of £11,268.60.

The lender also uses the ‘soft search’ facility which allows a borrower to get an indication of whether they are likely to be accepted for the loan. If they’re rejected this won’t leave a mark on their credit score, as is the case with most lenders. For more read The lenders who won't damage your credit score.

Derbyshire Building Society and M&S Bank are in joint second place with 5% interest on loans of the same amount.

Although the headline rate is 4.9%, as with any loan, only 51% of borrowers have to be offered this rate. Therefore it’s worth shopping around to check what other rates are on offer if you’re not eligible for a Zopa loan.

Our comparison tools show the full view of the market but here I’ve listed the five in this sphere.

Peer-to-peer lending

In the past year this kind of lending has really taken off as borrowers and lenders look for alternatives to the high street banks.

Each website works in a different way, but the basic principle is people lending and borrowing from each other and cutting out the middle man – the bank. This makes the entire process cheaper and more competitive. You can read more about it in our article What is peer-to-peer (P2P) lending?

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The cheapest personal loans

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Government scheme fails to boost business loans

Payday loan companies are out of control, says Citizens Advice

Amigo Loans and the dangers of being a guarantor