Best Personal Loans

These loans do not need you to put up any collateral…

Updated: May 19, 2024
Matt Crabtree

Written By

Matt Crabtree

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Interest rates on loans are often lower than those on credit cards, making them the most cost-effective option if you understand debt and do not end up in an endless negative cycle.

You will also rest well knowing the precise sum of your regular repayments.

Unsecured personal loans are often the most cost-effective kind of credit for major purchases and renovations around the house. Browse these low-interest loan options to discover the right one for your needs.

In this article, we cover how personal loans work, and review providers for loan rates of between £5,000 and £15,000.

ProviderScoreDetails
1. Tesco Bank★★★★★Learn more
2. TSB Bank★★★★★Learn more
3. Halifax★★★★★Learn more
4. Sainsbury's Bank★★★★Learn more
5. Zopa★★★★Learn more

At a Glance, Pros and Cons

Let’s look into the pros & cons of the UK’s top personal loans?

Pros 

✅ Freedom to decide when to make loan payments. Loan terms typically range from one to seven years; selecting a longer period will result in cheaper monthly payments but higher interest costs throughout the life of the loan.

✅ Monthly payments are set in stone. If you are trying to stick to a strict budget, the fixed monthly payments may be a relief.

✅ Option to borrow a higher amount. If you need money for major purchases like new appliances, landscaping, or house repairs, a personal loan may be a better option than using a credit card.

✅ Interest rates that are competitive. When borrowing £7,500 or more, interest rates on personal loans might be competitive.

✅ Separate from property assets. With a personal loan, you will not have to put up valuables like your house as security.

✅ Suitable for merging debts. Consolidating many loans into one personal loan payment with a single lender might be a huge relief. You could save money in the long run by selecting a loan with a low interest rate.

Cons 

Hard and fast payback terms. Personal loan payments are set, unlike those on a credit card, so you will need to make sure you have enough money each month to cover them.

Larger interest rates for little money. Borrowing between £2-£3,000 often results in higher interest rates than borrowing between £7.5-£10k. This might tempt you to borrow more money than you need or are capable of paying back.

The mentioned pricing is not guaranteed. At least 51% of approved borrowers must be provided the APR being advertised, while the remaining 49% could be given a higher rate. Those with poor credit are often given higher interest rates, while those with excellent credit get the most favourable terms. 

No zero-interest promotions available. Personal loans, in contrast to certain credit cards, do not provide introductory interest-free periods.

May be fees for prepayment. There may be fees associated with prepayment of a loan, which might amount to a couple of months of interest.

Top personal loans — Reviews

Keep in mind that debt may quickly become a vicious cycle that is difficult to break. So, tread carefully if you decide to enter it. 

An unsecured personal loan might be a good option if you need to borrow a large quantity of money over a certain length of time. Unsecured personal loans often have lower interest rates than credit cards and allow you to borrow more money than an overdraft does at your bank.

But before you apply, you should learn the ins and outs of unsecured loans, the pitfalls to avoid, manage spending, and how they stack up against secured loans. 

Keep in mind that debt may quickly become a vicious cycle that is difficult to break. So, tread carefully if you decide to enter it.

Find our top picks below 👇:

1. Personal loans from Tesco Bank — Long grace period

Personal loans from Tesco Bank come with unusually extended repayment terms and a grace period of two months during which no payments are due. However, you should know that this choice will raise your total loan payments.

While Clubcard members may be eligible for lower interest rates and excellent customer ratings, those with poor credit or who need the biggest feasible loan may wish to search elsewhere.  

Tesco Bank was founded in 1997 and has been wholly owned by Tesco PLC since 2008.

The bank provides a variety of banking services, such as personal unsecured loans, credit cards, auto insurance, and savings accounts. Borrowers at Tesco Bank may choose between a traditional secured loan or an unsecured personal loan. 

To apply, it is not necessary to be a current client of the bank. A personal loan from Tesco Bank may range from £1,000 to £35,000, and the repayment period might be as short as one year or as long as 10 years, depending on the amount borrowed and the intended use of the money. 

What is the application process like and how long does it take?

It is possible to secure a Tesco loan more quickly than with many other lenders because of the online application's prompt acceptance and two-hour funding time. However, this is not a guarantee, and you should know that Tesco uses Faster Payment, which may occasionally take up to 48 hours to send money. 

If you apply over the phone or if the bank requires more paperwork before making a loan decision, the process might take anywhere from five to ten days.

Why use

✔️ You have the option of delaying the beginning of your repayment period and selecting the date of your monthly instalments.

✔️ You can get a loan with a cosigner.

✔️ When applying online, you could get a response right away.

✔️ Tesco Bank provides several contact options for customers in need of assistance.

✔️ Members of the Tesco Clubcard program may be eligible for discounts.

Why avoid

❌ Prepayment penalties apply if you pay off your loan early.

2. TSB Bank — Popular personal loan provider

Both current account holders and new clients may apply for unsecured personal loans from TSB. The company provides competitive offerings, even though pre-existing TSB customers have more options for loan amounts and funding times.

After Lloyds TSB separated into two distinct entities in 2013, TSB, a UK high street bank, was bought by the Spanish banking corporation Sabadell in 2015.

In addition to checking and savings accounts, mortgages, credit cards, and loans, TSB also provides services for businesses.

No TSB checking account is required to apply for a loan. However, you may have to wait longer to obtain your money and may be limited to borrowing between £1,000 and £25,000 if you do not have a checking account.

With a TSB loan, you may make payments whenever is most convenient for you, and if necessary, you can even request a payment vacation. You may pay off your loan sooner by making overpayments, but doing so may result in penalties.

What is the application process like and how long does it take?

Quick applications, adjustable payback terms, and a wide variety of assistance options characterise TSB loans.

Tip 💡: You need not need a checking account with TSB to apply for a loan. While new customers may only be eligible for smaller loan amounts, existing customers may qualify for larger loans and get their funds the same business day they are authorised.

If you do not have a TSB current account, you will not have as many loan alternatives, and getting your money might take an extra day. 

Lenders are obligated by law to provide you with the annual percentage rate for loans so that you may easily compare different options. It estimates the total cost of a loan over a year, factoring in the interest rate and any regular fees. The APR is only one factor to consider when evaluating a loan. 

Why use

✔️ The due date for your payment is flexible upon request.

✔️ Loan amounts for TSB current account members might range from a few hundred dollars to a few million.

✔️ A shared loan is possible.

Why avoid

❌ Funds may not be available until the next business day for non current clients.

❌ If you pay off your loan more than 90 days early, you will be charged interest.

3. Halifax — Quick personal loan cash advances

Loan applications at Halifax are processed quickly, and you generally get cash fast too. A loan from Halifax, which is available regardless of whether you have an account with them or not, may be used for many different things.

Halifax has also been around since 1852, making it one of the oldest and most established high street banks.

Halifax, which is now owned by Lloyds Banking Group, is a financial institution that provides a wide variety of services, including checking and savings accounts, credit cards, mortgages, insurance, and personal loans. 

They’re one of the few banks that does not need a checking account to apply for a loan. Non-clients may still apply for loans of between £1,000 and £25,000 and may get the funds within a few hours, however current customers have priority when it comes to lending amounts.

Special Tip 📓: You have considerable leeway with a Halifax loan; you may make overpayments and even request a payment vacation if necessary. However, if you wish to pay off your loan in full before the end of the term, you will incur interest fees, as is the case with many lenders.

What is the application process like and how long does it take?

The application procedure for a Halifax loan is straightforward and quick, and the loan terms are flexible.

Halifax's loan limits are on pace with those of other lenders, however unlike those of some other companies, you may request for a loan and have the money in your account within a few hours. During the loan period, you may request a delay in payments if necessary.

One disadvantage of banking with Halifax is that many key service features, although potentially helpful, are restricted to consumers who have a Halifax current account. For instance, if you are already a client, you can borrow twice as much as a new customer, and if you want a combined loan, both applicants must be customers of Halifax.

And if you carry a balance from month to month, the interest you pay on any credit card with rewards points will be greater. However, you may put off paying interest on new purchases for a whole month if you pay off your balance in full every month.

Why use

✔️ Within two hours, you could get funds for withdrawal.

✔️ Borrowing amounts can increase for those with a Halifax current account.

Why avoid

❌ If you pay off your loan early, you’ll incur prepayment fees.

❌ A shared loan from Halifax is only available to Halifax clients.

4. Sainsbury's Bank — Available to Nectar cardholders

Fast loan approvals and preferential interest rates may be available to Nectar cardholders who apply for a personal loan at Sainsbury's.

Sainsbury's Bank, which debuted in 1997 as the first supermarket bank in the UK, provides customers with a number of banking options, such as savings accounts, credit cards, personal loans, and travel money.

Unsecured personal loans from Sainsbury's Bank may be taken out by either an individual or a couple.  

Applying for a personal loan from Sainsbury's does not need you to be a current client of the bank, however if you are a member of the Nectar reward system, you could qualify for reduced interest rates and larger loan amounts (up to £40k). Sainsbury's offers loans with variable repayment durations between one and seven years.  

If you are thinking about taking out a loan, it is smart to borrow exactly what you need and pay it back as fast as possible while still staying within your monthly budget.

What is the application process like and how long does it take?

If you request for a loan at Sainsbury's Bank, you could hear back from them right away, and the money could even show up in your account the same day. Loans up to £40,000 are offered at preferential rates to Nectar members, but borrowers who require amounts more than £25,000 will need to go elsewhere for financing. 

If you apply for a loan online, you can also sign the agreement and submit supporting papers digitally. A printed copy of the loan agreement is also available for those who prefer this method.  

Tip:- The loan calculator at Sainsbury's can help you estimate the interest rate you could obtain and the monthly payments you would have to make. Your credit score will not be impacted in any way. A personalised quotation, which may have an impact on your credit score, is only available after you have applied for the loan

Why use 

✔️ If you sign the loan agreement online, you could get speedy approval and a quick turnaround on money.

✔️ Getting a loan as a couple is possible.

✔️ Borrowing limits are higher, and Nectar members may be eligible for lower interest rates, giving you more space to pay off your debt.

Why avoid 

❌ The date when your payments will begin is not flexible.

❌ Lower loan amounts for those who are not already in Nectar’s loyalty program.

5. Zopa — Alternative online personal loans lender

Personal loans from Zopa, an online lender, may be used for everything from paying for a new vehicle to financing a wedding.

In 2005, Zopa pioneered the peer-to-peer lending industry in the United Kingdom. But in 2020, it ended its P2P activities and became a fully online bank subject to regulatory oversight.

Personal loans are one of the many new services that Zopa provides to its customers.

You may repay Zopa loans in predetermined monthly instalments over a period of one to seven years. To help you pay off your loan quicker, Zopa also enables you to make overpayments without incurring any costs. Zopa offers loans between £1k-£35k, and its mobile app makes it easy to track payments and stay on top of due dates.

Zopa's loan eligibility check will not have any effect on your credit score. This may give you an idea of whether or not you will be accepted, and at what interest rate.

A loan’s eligibility service may check with numerous lenders for you and give you an idea of how likely you are to be approved for a variety of loans without negatively impacting your credit. Make sure the service you select does only soft searches, and see how many lenders it checks before committing to it.

What is the application process like and how long does it take?

Personal loans from Zopa are simple to apply for and get, and they come with excellent customer service and a mobile app for convenient loan management. Once the loan terms have been agreed upon, the money may be sent quickly. However, applicants in search of a combined loan will have to go elsewhere, since Zopa does not support joint loan applications.

A Zopa loan application may be made either directly or through a broker. It is possible you may find a better loan deal elsewhere, however, so it is always a good idea to shop around.

If you want to know how much you would have to pay back each month if you borrowed a specific amount for a certain period of time, you may use the calculator on Zopa's website.

According to our poll, this is the single most essential factor in choosing a loan provider. Keep in mind that the calculator is using the representative APR to provide you with these findings, and that the actual interest rate you pay on a loan may be different.

You’re able to check your eligibility and the rate you could get on a loan from Zopa before submitting a formal application. To determine your eligibility for a loan, Zopa will review your personal and financial information and conduct a soft credit check, which will not appear on your credit report or be seen by other lenders.

Why use

✔️ Once your application is accepted, you get instant access to funds.

✔️ Number of ways to contact customer service, including a dedicated app.

Why avoid

❌ New loans may include prepayment penalties.

❌ Joint loans are not an option on Zopa.

❌ Zopa is an online-only bank, hence it does not provide in-person assistance to its customers.

Britain’s top personal loans — Buying Guide

Let’s explore these services further as a topic. 

Why personal loans are being used… 

What exactly are “unsecured personal loans”?

Personal loans, often known as unsecured loans, do not need providing collateral to the lender. Lenders will give you a lot more weight if you have a good credit score and stable financial status.

Because of this, the amount you can borrow with an unsecured loan will most certainly be far more than the amount you may borrow with an unsecured personal loan. When comparing loans, keep in mind that rates might vary depending on the sort of loan you are interested in.

How much do personal loans typically cost?

Personal loans are an option to think about when you need a sizable loan. Interest rates typically decrease with increased borrowing, up to a cap of about £25k.

Advertisements for loans must provide the representative APR. The annual percentage rate incorporates not just the interest rate but also any additional costs you may incur. Use this to determine which loan offers the best value.

When I apply for a loan, what interest rate can I expect?

Keep in mind that the APRs listed for loans are only “representative”, thus even if you are approved for the loan, you may be charged a different, higher rate. If your credit score is low, this may be the case.

However, the average loan rate must be offered to at least 51% of borrowers.

The issue with risk-based pricing is that the provider will perform a credit check and leave a “footprint” on your file when you apply to find out what rate you will receive. If you apply for credit several times in a short period of time, it might lower your credit score and make it more difficult to get a loan in the future.

How long would it take to approve my loan?

You can expect a set interest rate and repayment schedule from most lenders offering unsecured personal loans. This means that you will know exactly how much interest you will be charged, when your loan is due, and how much you will have to pay back each month, all before you ever take out the loan. 

Personal loans typically range from £1,000 to £10,000, while larger loans of up to £25,000 may be possible in rare cases. The typical repayment term for a personal loan is between three and ten years.

Leading personal loans: The Verdict

You can prepay personal loans, but you should be aware of the associated fees. Determine whether it is worthwhile to pay what may be the equivalent of one to two months' worth of interest. 

However, practically everybody who took out a personal loan after February 1, 2011 is allowed to prepay up to £8,000 per year without incurring any penalties. 

If you overspend your loan by more than this in a given year, however, you may be subject to a fee of up to 1% of the overdue principal owed by borrowers with more than a year remaining on their loans and up to 0.5% for those with a year or less remaining.

Summary of providers chosen

Tesco Bank

6.3% APR. Calculations based on a £7,500 loan with a fixed interest rate of 6.13% per year for 60 months. £145.43 per month in payments. A total payment of £8,725.80. Up to 34.5% APR.

TSB Bank

6.9% APR. Calculations based on a £10,000 loan with a 60-month term and a fixed interest rate of 6.69% per year. A total of £196.56 per month. The total due: £11,793.60. Maximum APR = 39.9%.

Halifax

6.3% APR. Calculated using a £10,000 loan with a term of 48 months and an interest rate of 6.13% per year (fixed). Paying back £235.42 per month. The due amount: £11,300.16. The highest APR is 29.9%.

Sainsbury's Bank

6.2% APR. Calculations based on a £10,000 loan paid back over 60 months at a fixed interest rate of 6.2% per year. Loan instalments of £193.47 per month. The due amount: £11,608.20. The maximum APR is 29.9%.

Zopa

22.9% APR. Assuming a £10,000 loan with a 60-month term and an interest rate of 22.9% per year (fixed). Loan instalments of £269.40 each month. A total of £16,164. The maximum APR is 34.9%.

Related Guides:

FAQs

How should I think about the APR?

What are typical application periods?

In what ways are prepayments punished?

What exactly is a secured loan?

If you apply for a loan and are denied, what happens?

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Mentioned Banks

About Sainsbury’s Bank Sainsbury’s Bank is a British bank owned by the Sainsbury’s supermarket chain. It was the first supermarket bank to open in the UK. It is headquartered in Edinburgh...
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About TSB TSB is a UK-based retail and commercial bank. It is a subsidiary of the Sabadell Group. The TSB we know today came to be in 2013, formed from Lloyds TSB Scotland PLC...
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About Halifax Formerly known as Halifax Building Society, Halifax is a British bank. It is named after the town in West Yorkshire where it was founded in 1853 as a building...
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About Zopa Bank Zopa is a British financial services company based in Buckinghamshire. It was founded in 2004 by a team from Egg internet bank and officially launched in 2005....
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About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank...
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Part of one of the world’s biggest supermarket chains, Tesco Finance was launched back in 1997. The Head Office is based in Edinburgh, and although there were bricks and mortar branches...
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