Loans Guide
Find the right loan at the best rate. Compare personal loans, bad credit options and debt consolidation from leading UK lenders — free and no obligation.
Whether you need to fund home improvements, consolidate existing debts, or cover an unexpected expense, a personal loan can be a straightforward way to borrow a fixed amount and repay it over a set period. But interest rates and terms vary enormously between lenders. Some charge APRs below 3% for larger loans, while bad credit options can exceed 30%. Comparing before you apply is the single most effective way to reduce the cost of borrowing.
Personal Loans
Fixed-rate unsecured loans from £1,000 to £25,000. Compare APRs from high-street banks and online lenders to find the cheapest borrowing for your needs.
Compare personal loans →Bad Credit Loans
Specialist lenders who consider applicants with lower credit scores. Guarantor loans, secured options and credit-builder products to help you borrow responsibly.
Compare bad credit loans →Debt Consolidation
Roll multiple debts into one manageable monthly payment. Compare consolidation loans that could reduce your total interest and simplify your finances.
Compare consolidation loans →How personal loans work in the UK
A personal loan — sometimes called an unsecured loan — lets you borrow a lump sum and repay it in fixed monthly instalments over an agreed term, typically 1 to 7 years. The interest rate is usually fixed at the outset, meaning your payments stay the same throughout.
Unlike a credit card, a personal loan gives you certainty: you know exactly what you owe each month and when the debt will be cleared. The best rates are reserved for borrowers with strong credit histories and loan amounts in the £7,500–£15,000 range, where competition between lenders is fiercest.
Lenders are required to show a representative APR, but the rate you actually receive depends on your individual circumstances. At least 51% of successful applicants must receive the advertised rate, but many get offered a higher one. This is why comparing your personalised rate — using soft-search eligibility checkers — is so important before you formally apply.
Choosing the right type of loan
If you have a good credit score and need to borrow between £1,000 and £25,000, a standard personal loan is usually the cheapest option. For larger amounts or longer terms, a secured loan (backed by your home) may offer lower rates but carries more risk — your property could be repossessed if you fail to keep up repayments.
If your credit score is poor, specialist bad credit lenders can still help, though at higher rates. Guarantor loans — where a friend or family member agrees to cover missed payments — can offer better rates than standard bad credit loans. Debt consolidation loans make sense when you have multiple debts at different rates and want to simplify into a single, potentially cheaper monthly payment.
Always check the total amount repayable, not just the monthly figure. A longer term means lower payments but more interest overall. And watch for early repayment charges — most lenders allow overpayments or early settlement, but some charge up to two months' interest as a fee.
Compare loans from lenders including
Barclays Santander Nationwide HSBC Zopa Lending Works M&S BankThree steps to a better loan
Why comparing matters
Average personal loan APR
The average UK personal loan rate sits around 6.4%, but the best lenders offer rates below 3% for strong applicants borrowing £7,500+.
Typical loan amount
The average UK personal loan is around £8,000, with the most competitive rates available on amounts between £7,500 and £15,000.
Applications rejected
Around a third of loan applications are declined. Checking eligibility first with a soft search avoids unnecessary hard searches on your credit file.
Average interest saved
Borrowers who compare before applying save an average of £1,200 in interest over the life of their loan versus accepting the first offer.
Loan Repayment Calculator
See exactly what a loan will cost you. Enter the amount you want to borrow, the repayment term and the APR to calculate your monthly payment, total interest and total amount repayable. The visual breakdown below shows how much of your total repayment goes to the lender as interest versus paying down the principal.
For illustration only. The rate you receive depends on your credit profile, income and the lender's criteria. At least 51% of successful applicants must receive the representative APR.
Watch out for these loan pitfalls
Borrowing responsibly means understanding the common traps that can make a loan more expensive — or more risky — than it first appears. Here are the key issues to look out for before signing a credit agreement.
The rate advertised is the "representative APR" — but only 51% of approved applicants have to receive it. The other 49% could be offered a significantly higher rate based on their credit profile. Always check your personalised rate using a soft-search eligibility tool before formally applying, so you know the real cost before it hits your credit file.
Most lenders allow early repayment, but they can charge up to 58 days' interest as a settlement fee under the Consumer Credit Act 1974. If you expect to come into money and want to clear the loan early, factor this cost in. Some lenders waive the fee entirely — compare settlement terms alongside the APR.
Payment protection insurance (PPI) is still offered alongside loans, though it can no longer be mis-sold the way it was historically. It covers repayments if you lose your income through illness, accident or redundancy. It is optional, and you are not obliged to take it from the lender — shop around separately if you want cover, as standalone policies are often cheaper.
Secured loans use your home as collateral, which means lower rates but a real risk of repossession if you fall behind. If you are borrowing for home improvements or a car, an unsecured personal loan is almost always the safer choice. Only consider a secured loan if you fully understand the risk and the lower rate makes a material difference over the term.
Payday loans charge APRs of 1,000% or more and are designed to be short-term, but many borrowers roll them over, trapping themselves in a cycle of debt. The FCA has capped costs at 0.8% per day with a total cap of 100% of the original loan, but they remain extremely expensive. If you are struggling financially, free debt advice from StepChange or Citizens Advice is a better first step.
Alternatives to consider before borrowing
A personal loan is not always the cheapest or most appropriate way to borrow. Depending on your circumstances, one of these alternatives might save you money or offer better flexibility.
If you have a good credit score, a 0% purchase credit card lets you spread the cost interest-free for up to 24 months. Money-transfer cards (which deposit cash into your bank account) work similarly and can replace a personal loan for smaller amounts. The key is to clear the balance before the 0% period ends, or you will face interest rates of 20%+.
Credit unions are community-based, not-for-profit lenders that are FCA-regulated and capped at 42.6% APR (3% per month). They are often more flexible than high-street lenders, especially for smaller loans or borrowers with limited credit history. Many also offer savings incentives alongside the loan. Find your local credit union at findyourcreditunion.co.uk.
Before borrowing for home improvements, check whether you qualify for government support. The Boiler Upgrade Scheme offers grants of up to £7,500 towards heat pumps. The ECO4 scheme provides free insulation and heating upgrades for eligible households. If you are on a low income, the Budgeting Loan from DWP (interest-free) or the Household Support Fund may also be available.
Loan comparison FAQs
Focus on the APR (Annual Percentage Rate) rather than just the monthly payment. The APR includes interest and fees, giving you the true cost of borrowing. Also consider the total amount repayable over the full term, and whether the rate is fixed or variable. Use soft-search eligibility checkers to see your personalised rate without affecting your credit score.
No. Using a comparison service like SaveCompare to check eligibility uses a soft search, which does not affect your credit score. A hard search only happens when you formally apply for a loan, and this is recorded on your credit file. That's why checking eligibility first is so important.
Yes, some lenders specialise in bad credit loans. The interest rates will be higher than standard personal loans, but comparing options helps you find the most affordable deal for your circumstances. Guarantor loans and secured loans may also be available at more competitive rates.
Personal loans in the UK typically range from £1,000 to £25,000, with repayment terms from 1 to 7 years. The amount you can borrow depends on your income, credit score, and existing commitments. Loans between £7,500 and £15,000 usually attract the lowest APRs because that's where lender competition is strongest.
The interest rate is the basic annual cost of borrowing the money. The APR (Annual Percentage Rate) includes the interest rate plus any mandatory fees, giving you the true cost of the loan over a year. Two loans with the same interest rate can have different APRs if one includes higher fees. Always compare APRs to get a fair like-for-like comparison.
Yes, under the Consumer Credit Act you have the right to repay a personal loan early at any time. The lender may charge an early settlement fee of up to 58 days' interest, but many lenders waive this entirely. Request a settlement figure from your lender before making a lump-sum payment so you know the exact amount needed to clear the balance.
Secured loans often have lower interest rates because the lender has your property as collateral, reducing their risk. However, if you miss payments, your home is at risk of repossession. Unsecured personal loans are safer for the borrower since no assets are at stake. For most people, an unsecured loan is the more prudent choice unless the amount is very large.
A guarantor loan requires someone you know — usually a friend or family member with a good credit history — to agree to cover your repayments if you cannot. This reduces the risk for the lender, which can result in a better rate than standard bad credit loans. The guarantor is legally liable if you default, so both parties need to be comfortable with the arrangement.
Debt consolidation can simplify your finances by rolling multiple debts into a single monthly payment, ideally at a lower interest rate. However, extending the term to reduce monthly payments means you may pay more interest overall. Compare the total amount repayable on the consolidation loan against the combined total of your existing debts before deciding.
Lenders only have to give the advertised "representative APR" to at least 51% of successful applicants. The remaining 49% may receive a higher rate based on their credit score, income and existing commitments. This is known as risk-based pricing. Using a soft-search eligibility checker before applying shows you the rate you are likely to receive without affecting your credit file.