Top personal loans are getting cheaper!

Need to borrow a bit of extra cash? Look no further than these five best buy personal loans.

If you regularly visit us here at lovemoney.com, you'll already know we do harp on a bit about how much we like fantastic 0% credit card deals!

But we realise they don't suit everyone. For instance, if you need to make a large purchase - but you have no hope of paying off what you owe within a typical interest-free period. Or, if you want to consolidate existing debts but you think they'll take several years to clear. In both these cases, a 0% card won't suit you because the 0% deal only lasts for a short period (typically a year, although the market-leader, Virgin Money, lasts 16 months).

If you need a longer term solution, unfortunately, a 0% credit card may not be the best option for you.

Rates are coming down

This is where personal loans come in. Luckily, loan rates are cheaper now than they were at the end of last year. Back then the best buys charged around 9% APR, but now the most competitive products scrape in at under 8%.

It's still a far cry from the days when you could pick up a low-cost loan for less than 6%, but it's a step in the right direction at least. The even better news is that Nationwide has cut back loan rates this week to unveil a new market-leader with a great rate of 7.7% on loans of £5,000 to £14,999.

So, let's check out the latest best buys for a loan of £10,000:

Best buy personal loans - £10,000 repaid over five years

Existing customers only

The trouble is, even though rates are coming down, some of the best choices on the market not available to everyone, as you can see in the 'What's the catch?' column. And this is the major drawback with Nationwide's new offering. You'll only be eligible to apply if you're an existing current account holder with a Flex Account.

Apparently, this is the first of many exclusive offers Nationwide Flex Account holders are set to enjoy in the coming months. Lucky them!

It's a similar story at supermarket giants, Tesco and Sainsbury's. Tesco's cheapest loan is only available to existing Tesco Personal Finance customers, while Sainsbury's Finance Shopper With Nectar Card Loan is, not surprisingly, only offered to shoppers with a Nectar card. That said, it's easy enough to pick up a card - for free - which would then allow you to apply. If you'd like to find out more, check out this video where I review the pros and cons in more detail.

Note that if you already have a loan with Tesco's or Sainsbury's, it's very likely a second application will be rejected. So it makes sense to try somewhere else to protect your credit rating.

Available to everyone

Thankfully, some of the best buy loans are open to new and existing customers alike. For example, the Alliance & Leicester Exclusive Personal Loan offers a great rate of 7.9% to all applicants. And the same goes for the Tesco Personal Finance Personal Loan which charges a typical rate of 8%. This is only marginally higher than its exclusive rate of 7.9%, and increases monthly repayments by less than 50 pence.

How to manage your loan

Now you know which best buy to go for, make sure you follow these tips:

• Set your loan up over the shortest term possible, but make sure you can comfortably afford the repayments.
• Obviously, it's a good idea to get out of debt as soon as you can. But each of these best buys charge an early repayment penalty if you clear your balance before the term ends. The penalty is equivalent to one month's repayment. If the loan is due to be paid off soon, it may be more cost effective to wait until the end of the term, to avoid this penalty charge.
• Watch out for repayment holidays which allow you to take a temporary break from paying off the loan. Interest is racked up during this period which increases the amount you pay overall. So, always say no to a holiday if you can afford to keep paying!
• When you choose a loan look at the total amount repayable (TAR) as well as the APR. The TAR will show you the total cost of your loan including any extra fees, and the cost of any compulsory repayment holidays. However, in this best buy table, the loans with the cheapest APRs also happen to have the lowest TARs - making life nice and simple.

On a final note, bear in mind if you want to borrow more or less than £10,000, other loans may offer better value. Make sure you compare loans at lovemoney.com to find the right one for you.

More: Seven simple steps to shopping for a personal loan | Five cheap loans that are true best buys