Top loans for all borrowers

We separate the wheat from the chaff to reveal the top borrowing solutions to suit everyone.

Borrowing money can be a confusing business. The right loan for you will depend on the amount of money you need to borrow, how long it's going to take you to pay it back, and your own personal financial circumstances - including the strength or weakness of your credit rating.

To make matters even more complicated, many of the cheapest loans on the market aren't actually called 'loans' at all! Here, I'm going to simplify the whole business, and shine a light on some of the borrowing options that will suit you best.

If you're borrowing under £2,000

One of the simplest, cheapest ways to borrow less than £2,000 is to find a current account which comes with a decent interest-free overdraft.

The Alliance & Leicester Premier Current Account, for example, offers a 0% overdraft of up to £2,000 for one year. Switch to this account and you'll also be given £100 cashback and free annual European travel insurance as long as you fund it with at least £500 a month.

When the one year, interest-free overdraft deal is up, you'll start being charged an overdraft usage fee of 50p a day, with an upper limit of £5 per month.

The best alternative deal comes from Santander: Its Preferred Overdraft Rate current account offers you a similar 0% overdraft for the first 12 months. It also says it will match your previous overdraft up to £5,000 (dependending on your circumstances), so this may be a better account to go for if you need to borrow more than £2,000.

However, with the Santander account you'll need to pay in at least £1,000 a month. And after the year is up, your overdraft rate will jump to 12.9% APR.

So, whichever account you choose, you should try your best to clear your overdraft within the first 12 months. An overdraft can represent a free loan of a relatively small amount of money - but it's certainly not a long-term borrowing solution.

If you're borrowing under £5,000 and you have a good credit score

If you need to borrow under £5,000, another interest-free option to consider is a 0% on purchases credit card.

This sort of card will give you 0% interest on all new spending for a certain period of time. That makes it a good solution for people who face urgent expenses, but who don't have the money in the bank.

The Tesco Clubcard Credit Card currently offers the longest 0% purchases deal, giving you 12 months of interest-free spending. After this the typical APR climbs to 16.9%, so you need to make absolutely sure you clear the balance before the 0% period ends.

The maximum credit limit of each card will be subject to status, but is rarely more than £5,000.

Just bear in mind that 0% purchase cards are generally only available to people with very good credit ratings. To see your own credit report, you can sign up to a free trial with ratings agency Experian.

If you don't want to start paying when the trial comes to an end, just make sure you unsubscribe within 30 days.

If you're borrowing £5,000 - £15,000

If you need to borrow over £5,000, a personal loan may fit the bill. You're moving away from interest-free territory here, but - unlike an overdraft or a 0% credit card - a personal loan will allow you to spread your repayments over several years.

When you're looking for a personal loan, there are several factors you'll need to consider - read Six top tips for an affordable loan to find out more. However, the interest rate will inevitably be an important consideration.

The Existing Customer Personal Loan from Nationwide is currently offering a market-leading rate of 7.6% APR (typical) on loans of between £7,500 and £15,000. Unfortunately - as the name suggests - this loan is only open to customers who already have the Nationwide's Flex current account.

If you're not a Flex account holder, the best rate open to you is offered by Alliance & Leicester personal loans. They are available to both new and existing customers, and offer a typical APR of 7.8% on loan amounts between £7,500 and £14,950.

Remember that the typical APRs described are usually only available on loans over £7,500. If you only want to borrow £5,000, you can expect rates to rise. For example, Alliance & Leicester is currently offering a top rate of 8.7% APR (typical) to borrowers who want to borrow £5,000 over three years.

Loans outside the box

If you feel conventional loans aren't offering you a good deal, it's also worth investigating a social lending venture called Zopa. This initiative allows you to borrow from other people, rather than from banks and building societies.

When you apply for a loan, Zopa will credit score you and offer you a loan rate based on how good your credit rating is. At the moment, for example, Zopa maintains that those people in the A* credit rating bracket can typically get a £5,000 loan, spread over three years, at an APR of 9.1%.

To find out more about Zopa, watch this lovemoney.com video.

What NOT to do

If you don't fall into any of these categories - or if you've been turned down for all the loans I've described - you may be tempted to take out a payday loan. You can find out more about payday loans here.

However, I would strongly advise against them. Payday loans are designed to suck people further into a crippling spiral of huge interest payments and rising levels of debt. In my opinion, they usually make debt problems worse rather than better.

If you're thinking about taking out a payday loan, please get free, independent debt advice first, so you're absolutely clear on what your options are. The National Debtline and your local Citizens Advice Bureau are both excellent places to start.

Get help from lovemoney.com

If you need a bit of help getting back into the black, you've come to the right place.

First, adopt this goal: Save money every day of the week

Next, watch this video: Wave goodbye to your overdraft forever

Then why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

And finally compare loans at lovemoney.com

More: Be a savvy borrower in 2010 | The best - and worst - ways to borrow money