How to find a low interest loan

Shopping around for a loan could save you hundreds of pounds in repayments. With interest rates ranging from under 5% to over 14%, it pays to do your research before signing on the dotted line.

What kind of low interest loan do you want?

There are two types of loans: personal and secured. Deciding which one to get depends on a few things:

• What do you want it for?
• How much do you want?
• How long are you going to take to repay it?
• What’s your credit rating like?
• Do you own a house?

If you aren’t a homeowner, you don’t have a choice, you will only be eligible for a personal loan. (Unless you have something else major to use as security, like a Picasso original.)

Personal and secured loans: the difference

A personal loan allows you to borrow up to £25,000 for as long as ten years. The lending is based on your credit history and your circumstances.

A secured loan uses your home as security. As a result, you can borrow more and for longer. And you can often get a better interest rate too. But if you default on your repayments you risk losing your home.

Finding a low interest loan

We have teamed up with uSwitch.com to provide you with a free and impartial comparison of both personal and secured loans.

We search for low interest loans from over 80 lenders, including all the major banks like Northern Rock, Alliance ;amp Leicester, Cahoot, Abbey, Bank of Scotland, Halifax and Lloyds TSB.

In just minutes you can find the loans that best match your needs. We ask you a few questions about what you want so that we can search for relevant loans.

Your results show you the best loans. It’s an impartial comparison, sorted by lowest monthly repayments.

The results highlight all the important stuff: the typical APR, the total repayable and the early settlement charge.

Low interest, anything else?

There are other charges to watch out for once you have found a low interest loan. These include:

• Early repayment penalties (also referred to as redemption fees)
• Administration charges for setting up the loan

Also be aware that you may not be eligible for the loan’s typical APR. A lender will calculate the typical APR in conjunction with a system called risk based pricing. This means that they assess your credit history before deciding what rate to offer you. A lender has to offer 66% of people that apply the typical rate, but you may not get it.

Tips for cutting your interest

• Find a loan with a low interest rate
• Pay the loan as quickly as possible
• Try to get a deal that doesn’t charge a penalty fee for settling early
• Consider using your home as security so you can get a secured loan

Ready to find a low interest loan?

It just takes five minutes to compare loans. And if you find one you like, you may be able to apply immediately. So, get to it!

Compare personal loans now

Compare secured loans now