How to get the cheapest loans

As interest rates have risen over the past year, cheap personal loan rates have been disappearing from the marketplace.

2007 there were an array of deals at below 6%, but these have dried up as lenders struggle to make money on their loans and the number of borrowers defaulting has risen.


But although choice has diminished, it's still possible to borrow money at below 6% and there are other avenues that consumers should consider if they want to borrow money. We look at the cheapest loan options.

Personal loan market


The final sub 6% loan, provided by Masterloan, has finally disappeared. The company now shares the top of the best buy table with Alliance & Leicester-owned Moneyback Bank. Both companies offer rates of 6.1% on loans over £5,000. Northern Rock is a close second at 6.2%.


However, these three rates are dependent on the applicant's credit ratings and only those with squeaky clean records are likely to get the advertised rate. Therefore, it is worth going through a service that scans your credit rating (but doesn't leave a footprint) before you apply.


If you want to borrow less than £5,000, your options are even more limited but there are still some good rates available. Barclaycard, which owns the Masterloan brand, offers 6.3% above £4,000, while Virgin offers 7.3% for loans above £3,000.