Compare lenders for a £5,000 loan

Whether you’re buying a car or planning an amazing holiday, a £5,000 fixed-rate loan could open up a range of possibilities. Most lenders will offer £5k loans, so you should have a lot of options when it comes to getting a loan. With interest rates tailored to the individual and ranging from around 3% up to 50% (or potentially even higher), it pays to pin down the best deal available to you.

The array of banks and specialist lenders out there cater to borrowers in a wide range of circumstances, including those with less-than-perfect credit. Let’s look at how to compare £5,000 personal loans to get the most competitive product for your particular circumstances and how to avoid some common pitfalls.

This will depend on your interest rate and the length of your loan. For example, if you get a £5k loan with a fixed rate of 5% p.a. and a 1-year term, you could pay around £428 per month. By comparison, a £5k loan with a fixed rate of 25% p.a. and 2-year loan term may pay £266 each month.

When repaying your loan, you’ll make fixed monthly repayments for a pre-agreed period, until your loan has been cleared. Borrowing for longer usually brings the monthly repayments down to more affordable levels. But it also pushes up the total cost of borrowing, making it especially important to secure a competitive rate. Here are some other examples of £5,000 loans at varying rates and loan durations.

You’ll most probably have more options available to you if you’re looking at borrowing £5,000 and you have a good credit rating. You’re likely to be able to apply to the majority of lenders and enjoy their most competitive rates.

It’s worth noting that big banks tend to work harder to win your custom when it’s a larger loan – there’s not much profit for them in a £5,000 loan at 5% over three years, for example, so even with excellent credit shopping around can make a big difference. Your current bank may offer same-day funding to existing customers, but if it’s offset by a higher rate, the difference in overall cost is likely to make choosing a new lender a smarter choice.

If you don’t need quite as much as £5,000 then another option would be to borrow a lower amount such as a £3,000 loan or even a £2,000 loan.

There are plenty of specialist lenders who offer loans to people whose credit history isn’t perfect. These lenders put more of a focus on affordability than credit history, but the frustrating reality is that they charge much higher rates, with APRs ranging from 30% all the way up to 99% annually. Applying with a guarantor who has excellent credit could be one way to keep your rate down. However, this may not be possible for some (and realistically, it doesn’t bring the rates down as much as you might expect – with guarantor loan representative APRs typically sitting between 35% and 50%).

The wide range of interest rates (and therefore the big difference in the overall costs you could incur) makes it even more important to find the best (i.e. cheapest) loan you’re eligible for.

The vast majority of lenders can now let you check your eligibility before you apply using a soft search facility (meaning it won’t affect your credit score). In most cases, the lender will also give you a more accurate idea of the interest rate you’d be offered.

So one option is to go lender-to-lender using eligibility checkers. But a good loan matching service can run this check with a whole panel of lenders in one fell swoop however – making this a sensible starting point for those with limited or less-than-perfect credit records.