Personal loan rates: how to borrow at the lowest cost

An eligibility checker uses a soft credit search — invisible to other lenders and leaving no mark on your credit file — to indicate how likely you are to be accepted for a loan and at approximately what rate. A full application, by contrast, triggers a hard search that is visible to other lenders for up to two years and can temporarily reduce your credit score. Run eligibility checks across multiple lenders before committing to any application; most major lenders and comparison sites provide them for free. Once you identify a loan you are likely to be accepted for at an acceptable rate, apply once.

APR (Annual Percentage Rate) is the total annual cost of borrowing, expressed as a percentage, including interest and any mandatory fees. It is the standard basis for comparing loans across providers. "Representative APR" is a regulated term: the lender must offer that rate to at least 51% of successful applicants — the remaining 49% can legally be offered a higher rate based on their credit profile. The rate quoted in any loan illustration is therefore a floor, not a guarantee. The rate you receive is determined by your individual credit score, income, existing debt level, and the lender's own underwriting criteria. This is why running a soft eligibility check before applying is the single most important pre-application step.

Yes, though the rates available will generally be higher than those offered to applicants with strong credit histories. Credit unions are typically the best first option — they assess affordability more flexibly than commercial lenders and are not profit-driven. If you have been declined by a mainstream lender, avoid high-cost short-term credit (including payday loans) and consider whether a personal loan is actually the right solution. Free debt advice is available at no cost from FCA-authorised charities — see our Debt help guide. A debt adviser can help you assess whether borrowing is the right step or whether there are better alternatives.

It depends on the amount and repayment period. For amounts above approximately £2,000 that will take more than 12–24 months to repay, an unsecured personal loan typically offers a lower rate than a standard credit card. For smaller amounts that can be cleared within a 0% purchase promotional period (currently up to 24 months on the best cards), a 0% purchase credit card costs nothing in interest — but requires the discipline to clear the balance before the promotional period ends. Carrying a balance after the 0% period expires typically attracts APRs of 24–35%, which is far more expensive than most personal loans. See our Credit cards guide for current 0% purchase offers.