Best personal loans for 2020

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Low rates

Hitachi Personal Finance Hitachi Personal Loan

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Bad credit

Oplo Homeowners Unsecured Loan

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Guarantor loans

Guarantor My Loan

Looking for the best personal loan available? The truth is that the “best” loan will entirely depend on your personal circumstances, your credit rating and how much you want to borrow. To help you with this part, we’ve curated a list of the best personal loans by credit status and size of the loan so you’ll get a better idea of which lenders are more suitable for you. We’ve also added a wealth of tips and advice to ensure that you’re able to confidently decide which is the best personal loan for you.

Best personal loan for good credit

While the best personal loans will depend on how much you want to borrow, in general you’ll find that the better your credit score and history, the better the rate you’ll receive. For personal loans over £7,500, you are likely to be offered a rate around 3% if you have a fair credit rating.

Hitachi Personal Finance Hitachi Personal Loan

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3.5%

APR representative

£25,000

Max loan

2-5 years

Loan terms

• Overview
• Pros/cons
• Details

With low rates and flexible loan terms, Hitachi Personal Finance offer competitive loans for those who currently have an excellent credit rating.

• Low rates
• Flexible loan terms

• No same day funding

Age	21 or over
Credit ratings	Good
Soft credit search	No
Joint applications	No
Instant decision	Yes
Repayment frequency	Monthly

Representative example: Borrow £10,000.00 over 3 years at a rate of 3.5% p.a. (fixed). Representative APR 3.5% and total payable £10,539.72 in monthly repayments of £292.77.

Best personal loan for bad credit

If you have bad credit or a limited credit history, you may find it hard to be approved for a personal loan. However, you still have loan options, but are unlikely to be offered the best rates. Instead, you may want to consider a guarantor loan or secured loan, especially if you find you’re only being offered unfavourable loan terms on a regular personal loan.

Oplo Homeowners Unsecured Loan

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25.2%

APR representative

£15,000

Max loan

2-6 years

Loan terms

• Overview
• Pros/cons
• Details

Unlike most lenders, Oplo offers unsecured loans to those with bad credit, provided they own their home, with instant decisions and flexible repayment options.

• Instant decisions
• Flexible repayments

• Only available to homeowners
• Rates will naturally be higher

Age	21 or over
Minimum income	£15000.00 Per Annum
Credit ratings	Poor
Soft credit search	Yes
Joint applications	No
Instant decision	Yes
Repayment frequency	4 Weekly, Monthly, Weekly

Representative example: Borrow £10,000.00 over 3 years at a rate of 25.2% p.a. (fixed). Representative APR 25.2% and total payable £13,876.56 in monthly repayments of £385.46.

Best fast personal loan

These days, many lenders will offer instant decisions or pre-approval on personal loans, but some will still take a couple of days to send you the money. However, there are some lenders that will fund your loan the same day and some lenders will even do it within a couple of hours of you being approved.

Lendable Personal Loan

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27.9%

APR representative

£20,000

Max loan

1-5 years

Loan terms

• Overview
• Pros/cons
• Details

Lendable is a peer-to-peer lender available to those with both good and poor credit scores. It offers flexible loans that can be funded within two hours of being approved.

• Quick funding and approval
• Available to those with good or bad credit

• Admin fee
• Late payment fee

Age	18 or over
Minimum income	£800.00 or more per month
Soft credit search	Yes
Joint applications	Yes
Instant decision	Yes

Representative Example: Assumed borrowing of £7,500.00 over 36 months at 27.9% APR representative. Monthly cost of £297.66. Total amount repayable of £10,715.68. Interest rate of 22.7% p.a. (fixed) and total fees of £440.00.

Best guarantor loan

If you have limited or poor credit history, you may have a better chance of getting approved for a guarantor loan. By having friend or family member act as a guarantor for your loan, you reduce the risk for the lender, which increase your chance of approval, and may also help you get better loan terms and rates.

Guarantor My Loan

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48.9%

APR representative

£10,000

Max loan

1-5 years

Loan terms

• Overview
• Pros/cons
• Details

Guarantor My Loan is a peer-to-peer lender specialising in guarantor loans, and aims to give options to those let down by traditional lenders. It can offer competitive rates, but also charges a service fee that increases the more you borrow.

• Available to those with limited credit
• Cashback incentive
• Flexible loan terms

• Large service fee
• Late payment fees

Age	21 or over
Credit ratings	Poor
Repayment frequency	Weekly, Fortnightly

Representative example: Borrow £4,000 over 3 years at a rate of 17% p.a. (fixed) with a service fee of 23.48% p. a. (fixed). Representative APR 48.9% and total payable £6,968.16 in monthly repayments of £193.56.

Best homeowner loan

Secured loans are a specific type of personal loan that requires you to use the equity you have in your property as collateral against the loan. In return, you’ll generally receive more favourable loan terms than you would with an unsecured loan, including much more competitive rates, loan amounts and terms.

Paragon Personal Finance Prime Rate Secured Loan

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65%

Max LTV

£500,000

Max loan

10-30 years

Loan terms

3.6%

APRC

• Overview
• Pros/cons
• Details

With flexible loan amounts and terms, Paragon offers competitive secured loans for homeowners looking to use the equity in their house to get a loan of up to £500,000.

• Large loans available
• Competitive rates

• Application fee
• Only available to homeowners

Minimum age	21
Maximum age	80
Credit profile	Good
Available to self-employed	Yes
Joint applications	Yes
Can be used to consolidate debt	Yes
Lender fee	£795

Features to compare to find the best loan

This is a non-exhaustive list of the features of personal loans that you can use to differentiate lenders in the UK, and to start to home in on the right products for your needs.

• Loan amounts. A good place to start is asking “Does this lender offer the amount that I need?”
• Eligibility. There’s no point applying for a loan if you’re not eligible, and remember that declined applications are likely to be visible on your credit record.
• Loan terms. More often than not, the loan term will simply be dictated by the affordability of monthly repayments. In other words, if you need to reduce your monthly repayment to make it affordable, then you may decide to spread repayment over a longer period. If you’ve already used a loan calculator and have a reasonable idea how long a loan term you’ll need, check that the lender you’re considering can accommodate this.
• Fees. There aren’t too many set-up fees in the world of personal loans, but they certainly aren’t unheard of. Where some lenders that you’re considering charge a fee, the total amount payable (the overall cost of the loan) might become your best benchmark for comparison.
• Total amount payable. This is the big one – if you only compare one factor, this should probably be it. You’ll want to keep the total cost as low as possible, while making sure your monthly repayments are affordable.
• Interest rate. A loan’s APR (Annual Percentage Rate – an annual summary of the cost of borrowing that all lenders must calculate in the same way) is normally the main “hook” that a lender will use to market the loan. Just remember that lenders are only obliged to award the advertised APR to 51% of these who take out the loan. Others may end up paying more, subject to the lender’s assessment of their circumstances. You can normally get a more accurate idea of the cheapest loan a lender can offer you when you tell them a bit more about yourself and the loan that you’re after.
• Turnaround time. If you’re in a hurry, you might want to look at the time each lender states it takes to actually draw down your funds (transfer the money to your nominated account). If you get a loan with a bank you’re already a customer at, chances are it’ll be pretty quick, however it almost always pays to shop around.
• Restrictions. Personal loans can be used for almost anything, but lenders are highly likely to ask you the purpose of the loan, and they may have prohibited loan purposes. Typically these can include gambling, business purposes and using the loan as a down payment to get an even bigger loan (like a deposit on a property with a mortgage, for example).
• Repayment holidays. Some lenders offer an optional month or two where you don’t make repayments. That can be handy if you need a break to get back on your feet financially. The downside of repayment holidays is that they increase the term of the loan, and the overall cost. It’s a holiday from repayments, not from accruing interest, after all.
• Early repayment. Most lenders will make a song and dance out of the fact that they don’t charge a penalty for making overpayments and/or repaying your loan early. That’s great, but it’s not the same as charging you less interest. A common policy is to charge a further two months’ interest on any amounts repaid early. So, if you’re hoping to try to make over-payments here and there, or if you have a lump sum coming in but you’re not sure exactly when, then factor the lenders’ early repayment terms into your comparison. Favourable terms could even be more important to you than a fractionally better rate.

3 steps to help you find the best personal loan

• 1. Find the right loan type for your purposes

  The are a range of different products that sit under the umbrella of “loans”. If you need £100 to tide you over until your next payday, then you’re not looking for a second charge mortgage! Similarly, if you’re looking to kick start your new business, a standard unsecured personal loan from a bank might actually be off the table (there are however government-backed loans for start-ups that are well worth a look). Some of the main types of loan are listed below.

• 2. Compare loans to establish the features that are important to you

  Some of the key features of personal loans are listed below. Which of these are important to you? Perhaps you want to be sure that the loan you take out will reward you for making overpayments and clearing the debt ahead of time. Or perhaps you’re looking for a loan that offers a repayment holiday option to give you a month or so to get back on your feet financially. Ask yourself which of these features are essential, and which ones simply “would be nice to have”.

• 3. Get the most affordable loan that meets your needs

  OK, so you know what you’re after, now it’s time to find the most competitive product available to you. Rates are obviously important, but it’s not ALL about the APR. Focus on keeping the total amount repayable as low as possible, while ensuring the monthly instalments are affordable.

What to keep in mind when applying

• Don’t apply for, let alone take on, a loan you can’t afford.
  When borrowing money it is always important to find out what your monthly repayments will be. If you don’t know for certain that you can afford that amount out of your regular income, then there’s a good chance a lender will have doubts too. Rejected applications don’t show on your credit file, but applications for credit do – too many of these in a short space of time and prospective lenders could be put off. If you end up taking on a loan you can’t afford, you’re setting yourself up for problems down the line – late repayments come with fees plus additional interest, and are highly likely to damage your credit record too.
• Don’t apply for lots of loans in a short space of time. Take the time to make one sensible application, and if you’re rejected, try to find out why.
• Read the fine print. When a lender approves your application, they’ll send you a loan offer. This is an opportunity to check that you’re actually being offered what you applied for (rate, amount, term etc.), and to check you’re happy with the terms of the agreement. OK, it’s not the most exciting document in the world, but read the terms and conditions from start to finish and ensure you are aware of all fees and restrictions.