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Personal loans UK

Searching for personal loans isn’t always easy. This guide will help you find a personal loan to suit your needs.

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How do I find the best personal loan?

Searching for personal loans can be a complicated process. Uswitch has several lenders offering personal loans in the UK, from traditional banks and building societies to online banks and post office loans.

Compare personal loans

Compare a range of loans from personal loans to debt consolidation loans.

It is important to shop around to get the best deal, and that is where Uswitch can help. If you're looking for the cheapest personal loan then our comparison will show you the lenders with the lowest rates that suit your needs.

How can Uswitch personal loans help me find the best deal?

When you're looking for a personal loan in the UK you need to consider a number of things: 

  • How much you want to borrow 

  • How long you want the term of the loan to be

  • What rates are on offer

  • Your personal financial circumstances and credit rating

All these factors will affect the amount of monthly interest rate you will pay on your loan.

When you use the Uswitch personal loans comparison tool you simply put in how much you want to borrow, and over what term. The search results will show you the best loans available based on your specific needs. 

The Uswitch loans service will show you :

  • The total amount payable over the length of the loan

  • Any set up fees 

  • The representative APR interest rate

  • How much you might pay each month. 

Then there's a button next to each loan that enables you to click through and apply for it.

By clicking ‘more information’ you can also see the eligibility criteria and check whether you're likely to qualify. 

After you click through to the destination page you will also be able to see more information about the loan and the repayment terms. 

How much can I borrow on a personal loan?

How much you can borrow depends on your income and credit history. You need to make sure you can afford the repayments or you could end up in debt.

Most people use personal loans to borrow smaller amounts, but many lenders offer up to £25,000. Several lenders offer more, such as £35,000 or even £50,000. Some loan providers will offer even more than that, particularly to existing customers.

One strange quirk of personal loans is that for loans under £15,000, the more you borrow, the cheaper your interest rate will be (as the lender is guaranteed more in interest repayments). For instance, you’ll typically get a much better rate on a £5,000 loan than you would on a £4,000 loan.

How do I know if a loan is good value?

The main criteria to look out for when comparing loans is the APR, or ‘annual percentage rate’.

This is an interest rate that includes fees and charges. In means you can compare the real rate of interest that you would pay over the course of a year. 

Many companies advertise a headline APR, which is the best rate they have available. To use this, they have to offer it to at least 51% of successful loan applicants. Of course, this means some people are offered worse deals while others may be offered cheaper loans.

When you get the search results for Uswitch personal loans UK you will be shown this representative or headline APR. This is not necessarily the rate that you will pay. The final rate you pay will be decided once you have made a personal application and it has been approved. The representative APR figure is just a guide.

What is a ‘representative’ APR?

A representative ‘APR’ shows you the interest rate that at least 51% of people who applied for the loan were offered. 

So, whilst APR is the best way to compare different loans, finding out which personal APR you will be offered is trickier.

When you apply you may be offered a higher, or lower, rate based on your credit history.

You have no way of knowing this until you apply for the loan, which will leave a footprint on your credit file. Too many footprints and you may be turned down for loans in the future. 

So, it's best to be sure that you want to go ahead with the loan and that you meet the eligibility criteria before you make a formal application. 

Try not to make lots of applications within a short period of time, as this may affect your credit rating.

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What are the hidden costs of a personal loan?

Most loans are fixed term, which means you pay them back for a set amount of time. The lenders know they’ll be receiving interest from you for a set period, which means secure profit.

Many loans also offer a fixed interest rate, which means you’ll pay the same each month. 

In this case, if you borrow £1,000, you will know from the outset exactly how much per month you will be repaying and what your total interest payments are.

However, you can usually get variable rate loans where the interest rate rises and falls. Variable rate loans are typically pegged to a financial indicator, such as the Bank of England base rate. This means your monthly payments can change.

To counteract you paying back the loan early, some providers may charge you early repayment penalties. Not all lenders charge this, so read the fine print. If you miss payments, you may also have to pay fees.

You should also know the difference between secured and unsecured loans. Secured loans are  when you put up an asset as collateral, most often your property.  If you can't pay back the loan your home may be repossessed. 

Unsecured loans are not linked to an asset and while the interest rate may be higher, your home is not at risk if you default on your repayments. 

Who are the personal loan providers in the UK?

You can get a personal loan in the UK from high street banks and building societies, supermarkets, shops and post offices, and online banks. 

With online banking you benefit from the fact that the lenders have lower overheads, so they usually charge less for personal loans. 

The best way to compare all these providers is to use the Uswitch loans comparison tool to see which lender is offering the best deal, as offers change frequently.

Why should I use the Uswitch personal loans service? 

Let us take the hard work out of finding the right UK personal loan for you. All you have to do it tell us a few details, and we’ll do the rest.

Our personal loans comparison service is completely impartial - we show you the most accurate listings of loan products that are available now.

Which is better – credit card or personal loan?

The right product for you will depend on how much money you need, what you intend to use it for, and how long you’ll take to pay it back.

Interest-free credit cards are a great way borrow small- to medium- amounts of money for a relatively short time.

A mortgage is usually the most sensible and common way to buy a house, borrowing a large amount for a longer term.

Personal loans are usually available between £1,000 and £35,000, and the money is borrowed over the medium term.

They enable you to borrow a fixed amount of money and repay it in regular monthly instalments over a period of time. They can be a helpful way to pay for home improvements, for example, because you might be able to borrow a larger amount than you might be able to on a credit card.

You should always compare all the products available to find the one that’s right for your needs and that’s affordable in your financial circumstances.

Why choose a personal loan?

For borrowing a fixed amount, loans may work out the cheapest option when compared to borrowing on a credit card or using your overdraft.

However, to get the most out of your loan you need to know what to look out for. Loan providers are required by law to show you an APR so you can compare between different loans. The higher the APR, the more you will pay in interest over the lifetime of your loan.

Also watch out for any hidden set up fees, penalties for paying off your loan early, or any other costs. The Uswitch loans comparison service shows you these before you commit to the loan. You can also find these in the small print of your loan agreement.

I need a few hundred pounds. Should I take out a cash advance with my credit card?

Interest-free credit cards are probably the cheapest way to ensure you can borrow money cheaply, but not everyone will qualify for one, and you need to pay them back before the deal runs out or things can get expensive.

Overdrafts might be another option worth considering. Some banks offer interest free buffers, but these are usually only a couple of hundred of pounds. 

Otherwise, you’ll have to pay overdraft costs. Check with your bank provider to see what this will cost. 

Credit unions are another good alternative. These financial co-operatives are member-run and offer rates of 3% or less. 

Payday loan providers charge very high rates of interest and are not advisable. Taking money out of an ATM on a credit card is expensive, with 2-3% fees just for withdrawals.

Would a personal loan be the best option for me to buy a new car?

There are a number of ways to pay for a new car, including a personal loan, or using your savings that you have built up in advance. There is also the option to use car finance, which may be offered to you in the showroom.

Whatever option you choose, it is important to be clear about the interest rates and fees you will need to pay, including any arrangement fees and penalties for paying off the loan early or missing payments. Ask for more information if you are not sure exactly how much you will be paying each month, and overall.

Compare personal loans

Compare a range of loans from personal loans to debt consolidation loans.