Compare £1,000 loans

Would a credit card be a better way (than a loan) to borrow £1,000?

It’s not a daft question. If you can get approved, then what’s called a “0% purchase credit card” is probably the cheapest way to borrow £1,000. These cards give you a set number of months of 0% interest on purchases, as the name suggests. There are a couple of key details to note, however. Firstly, that offer sometimes only applies to purchases made in, say, the first 60 days (check the terms). Secondly, after the 0% period is over, a horrible interest rate kicks in – typically over 20%.

All card issuers can now tell you whether you’d be likely to get approved for one of their cards, without any impact on your credit score (they do a “soft search”). That’s actually really great. What’s not so great is that most of them won’t tell you in advance what your credit limit would be. To find that out, you may have to under go a full credit check. Lloyds Banking Group (which includes Halifax and MBNA) is one of the few card issuers that does give you an indication of your credit limit from just a soft search (we think they all should!). The good(-ish) news is most mainstream banks aren’t that interested in issuing cards with limits below £1,000, so they’d probably just say “no”.

Another type of credit card that might be of interest is a “0% money transfer credit card“. These cards let you transfer money from the credit card to your current account. Sounds good, right? But the catch is a “transfer fee” – typically of about 3%.

£1,000 loan illustrations

Borrowing for longer usually brings monthly repayments down to more affordable levels. However it also pushes up the total cost of borrowing, making it important to secure a competitive rate. Here are some examples of £1,000 loans at varying rates and loan durations.

What about an overdraft?

An overdraft is likely to be a punishingly expensive way to borrow £1,000 (unless you’re a student with a chunky interest-free overdraft!). But ultimately it’s a question of comparing the rate you’d be charged on an overdraft vs the rate you’d be charged on a loan or credit card.

Don’t forget that overdrafts, credit cards and personal loans all have different repayment requirements. Overdrafts can drag on indefinitely, which is likely to be super-expensive. At the other end of the spectrum, personal loans are designed to be fulfilled at an exact point in time, so you know in advance what they’ll cost you each month and overall.

Eligibility requirements

Eligibility requirements vary from lender to lender, but expect to need to meet at least the following criteria:

• Be aged 18 or over.
• Be a UK resident.
• Hold a bank account.
• Have an email address and mobile number.
• Have a regular income.

Frequently Asked Questions

• Can I repay my £1,000 short term loan early?

  It’s normally possible to pay back part or all of your loan early, and doing so will normally save you money on interest. The exception to this is when you’re already near the end of your loan term (say, within 2 months).

• What information will I need for the online application?

  Usually you’ll just give enough data for the bank to be able to access your credit file. If it’s the first time you’ve had an account with the bank in question, you’ll need to jump through a couple of hoops to verify your identity and address. This is increasingly possible to do without heading to a branch.

• Can I cancel my loan?

  You have the right to cancel your loan within 14 days of receiving it. If you do so, you’ll need to immediately pay back your full loan.

• If my application is declined, can I try again?

  If your application is declined, you can normally try again at any time, but the outcome is unlikely to change change unless your circumstances have. Remember that seeing multiple applications for credit in a short space of time on your credit report could ring alarm bells for future prospective lenders.

Written by

Chris Lilly

Head of publishing

Chris Lilly is Head of publishing at finder.com. He's a specialist in personal finance, from day-to-day banking to investing to borrowing, and is passionate about helping UK consumers make informed decisions about their money. In his spare time Chris likes forcing his kids to exercise more. See full bio

Chris's expertise

Chris has written 519 Finder guides across topics including:

• Loans & credit cards
• Building credit
• Financial health
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