Here's how to find the best deals on larger personal loans.
The personal loan market has been in fierce competition this year, with rates dropping almost weekly as providers fight to stay at the top of the tables.
But this has mainly been on smaller loans of betwen £7,500 and £15,000, leaving the market for loans of between £15,000 and £25,000 relatively quiet.
Many providers offer loans within this range, but prices vary quite a bit. So it’s worth shopping around first to make sure you’re getting the best deal.
Large personal loans
Personal loans are available for almost any amount. The smallest rates tend to be available for lower amounts between £7,500 and £15,000. The best deal in this range costs 4.8% from Zopa followed by 4.9% from Nationwide.
As the loan amount goes up, so does the price, but interest rates are still lower than a year ago. In July 2012 the average interest rate on a five-year loan of £15,000 was 8.9%, but this has now fallen to 7.4%, according to Moneyfacts. For a loan of £20,000, repaid over five years, rates have also dropped from 9.3% to 8.3%.
[SPOTLIGHT]To work out exactly how much it would cost I’ve outlined the top five deals on a three-year loan of £20,000 in the table below. Sainsbury's has recently lowered its interest rates and now sits in second place in the best buy tables with a rate of 6.9% on its Sainsbury’s Bank for Nectar card holders.
The market-leading rate comes from Ratesetter at 6.4%. However, as this is a peer-to-peer lender it works in a slightly different way to traditional providers.
Individuals lend to each other, avoiding the bank, meaning lenders get a better rate on their cash than with savings, while borrowers can benefit from some great rates. One downside to this kind of lending is that it isn't yet covered under the Financial Services Compensation Scheme (FSCS) but it does have a provision fund to make up for any shortfall. You can learn more about it in our article: What is peer-to-peer lending?
The cheapest personal loans paid back over three years
|
Loans |
Representative APR |
Total amount repayable |
Monthly repayment |
|
6.4% |
£21,975.48 |
£610.43 |
|
|
6.9% |
£22,129.92 |
£614.72 |
|
|
7.0% |
£22,160.88 |
£615.58 |
|
|
7.2% |
£22,222.80 |
£617.3 |
|
|
7.2% |
£22,222.44 |
£617.29 |
To see how prices vary depending on how long you pay back a loan, below I’ve listed the prices for a loan of £20,000 paid back over seven years.
As you can see the interest rates are higher and you end up paying back more to the provider if you take longer to repay the loan, though your monthly repayments are a lot smaller.
The cheapest personal loans paid back over seven years
|
Loans |
Representative APR |
Total amount repayable |
Monthly repayment |
|
7.0% |
£25,179.00 |
£299.75 |
|
| 7.2% |
£25,333.56 |
£301.59 | |
| 7.2% | £25,333.56 | £301.59 | |
|
7.4% |
£25,333.56 | £301.59 | |
|
8% |
£25,951.80 |
£308.95 |
Personal loan rates
The advertised rate only has to be offered to 51% of successful applicants. So you may not get it if your credit record is less than perfect.
To get an idea of how your credit record looks, you can get a free trial with Experian thanks to Lovemoney. And if your record needs improvement, check out Ten simple steps to improve your credit record.
Thanks to Moneyfacts for help with this article