Compare lenders for a £5,000 loan
Use our loan calculator to compare rates for a £5,000 loan from popular lenders and give your application the best chances of success, even with bad credit.
£5,000 loan calculator and comparison
With no guarantor
With a guarantor
With a guarantor who is a homeowner
Late repayments can cause you serious money problems. See our debt help guides.
How can I get 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.
What would the payments be on a £5,000 loan?
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.
|Interest rate of 5.0% fixed p.a.||Interest rate of 10.0% fixed p.a.||Interest rate of 25.0% fixed p.a.|
|Over 1 year||£428.04 monthly,|
|Over 2 years||£219.36 monthly,|
|Over 3 years||£149.85 monthly,|
How do the repayments work?
You’ll make a fixed repayment each month, usually by direct debit. In other words you’ll know exactly what you’re going to pay each month and that figure won’t change. But behind the scenes, what each payment goes towards changes over the course of the loan.
Here’s an example of a £5,000 loan over three years at a fixed rate of 8%. You can see that in early repayments, you’re actually paying a relatively large amount of interest (the grey bit) each month. But towards the end of the loan, almost all your payment goes towards clearing the original sum borrowed.
Each bar represents an individual monthly repayment and you can hover/click to get a closer look at what’s going on in a particular month.
Will you be approved?
What credit score do you need to get a £5,000 loan?
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.
Should I just take out a credit card?
Potentially, yes. The answer depends on whether you can get approved for a 0% purchase card with a £5,000 limit (limits are tailored to the applicant) and also on how you intend to use the money and how you plan to pay it back.
Personal loans come in a lump sum with an agreed timeframe for repayment. By contrast, credit cards are a “revolving” form of borrowing – they can theoretically last a lifetime. You borrow what you need, when you need it (subject to your credit limit) and pay back what you want, when you want (subject to a minimum monthly payment). This can tempt borrowers into only paying the minimum and making additional purchases later on, resulting in indefinite debt. In fact this is something the Financial Conduct Authority (FCA) has been cracking down on recently.
Other considerations include fees (application fees, monthly or annual account fees, cash withdrawal fees etc.), offers/rewards/perks and the length of the application/approval process. Using the wrong credit card could cost you more, because credit cards can often have higher rates and fees than personal loans. However, using the right card correctly (like a card with a promotional rate of 0% on purchases) could allow you to cut interest payments out of the equation altogether.
Can I borrow £5,000 with a poor credit score?
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.
What about a £5,000 guarantor loan?
A guarantor loan can offer you a way of borrowing money if you’ve been refused elsewhere, with the help of a friend or relative acting as your guarantor. They’ll be liable if you miss a payment on your loan or are unable to pay.
Although loans for higher amounts (like a £10,000 loan) require your guarantor be a homeowner, many lenders accept non-homeowner or tenant guarantors for £5,000 loans if they have excellent credit and can afford to meet the repayments if you cannot. If your guarantor is a homeowner, you’re more likely to obtain a lower APR.
Late repayments can cause you serious money problems. See our debt help guides.
Generally speaking, the longer you borrow for, the more expensive the loan. The average £5,000 guarantor loan requires monthly payments over £200. You could opt for a longer loan in order to bring your monthly bill down, but really you should aim to keep your loan as short as possible while ensuring the repayments are affordable. At a rate of 44.9%, a £5,000 loan over five years would cost a whopping £5,085 more overall than the same loan over one year (but would come with significantly larger monthly instalments).
Guarantor loans can take a little longer to arrange. However, you could secure same-day funding if you prep your guarantor – it’s a big responsibility for them, so the lender will usually phone them to talk it over. They need to be comfortable with what they are taking on and will also need to be on hand to complete their part of any online forms and speak to the lender. It’s also the guarantor who actually receives the funds from the lender (this is a final security measure), so they’ll have to transfer the funds to you.
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