Why now is a great time to get a loan

If you want to borrow a large sum of money, fierce competition means rates are really low right now.

The New Year has begun with personal loan rates being slashed as providers vie to top the best buy tables.

In fact, competition has got so intense that Sainsbury's Bank has had to cut its rates again, having already reduced them once this month. Its reduced rates are only available until the end of January. You'll get a cheaper rate – what Sainsbury's terms its Shopper rate – if you're a Nectar cardholder.

Nowadays, loan providers aren't just the high street banks and building societies. The new breed – the online-only peer-to-peer lenders – also want our business. And that's one reason why rates are falling.

Peer-to-peer lenders allow ordinary people to lend their money to those looking for a loan. More people are flocking to this as a way to make reasonable returns as savings interest rates remain at rock bottom.

So if you want to borrow a larger sum of money and you’ve discounted the likes of using savings or putting it on a 0% on purchases credit card, let’s take a look at what’s on offer across different loan amounts.

Small loans (£5,000-£7,499)

Zopa, one of the peer-to-peer lenders mentioned earlier, currently offers the cheapest loan in this range of 5.9%.

Just be aware that Zopa has a reputation for turning down a large number of applications, so if your credit rating isn't great you might want to look elsewhere first.

Here are the best buys, using the example of £5,000 repaid over five years.

*M&S Bank customers only

Medium loans (£7,500-£15,000)

The cheapest rate available for medium-term loans comes from Sainsbury's Bank at 4.5%. However, it has to be repaid within three years.

If you want longer, here are the best buys, again led by Sainsbury's, using the example of borrowing £10,000 over five years.

*M&S Bank customers only
**HSBC current account customers only
***AA members only

Large loans (£15,001+)

The three cheapest rates in this range are only offered by banks to their existing customers.

Sainsbury's Bank offers the leading non-restricted rate of 6.5% if you can repay within three years.

Here are the top rates, using the example of borrowing £17,500 over five years.

*First Direct 1st account customers only
**Barclays current account customers only (must have had account for minimum of seven months and have deposited minimum of £1,000 a month)
***Lloyds Bank/Bank of Scotland/TSB current account customers only
****M&S Bank customers only
*****HSBC current account customers only

Not for everyone

All of the loans in the above tables offer attractive rates but not everyone will be offered loans at these rates. Lenders are only obliged to offer their best rates to 51% of successful applicants.

If you have a history of borrowing money and then paying off your debts on time, there's a good chance that you'll be able to borrow at a decent rate. But if you've never borrowed money before or you've been late with repayments, you may not be able to get the best deals.

Compare personal loan rates

More on borrowing:

The best 0% purchase credit cards

The best money transfer credit cards

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