Who does the cheapest loans in the UK?
If you're looking for the cheapest loans in the UK, steer clear of the high street and head for the Internet instead. Online-only offers give you big savings compared to normal loans, and a new breed of online lender doesn't have expensive branches to maintain – so they offer loans for less.
The cheapest loans in the UK tend to be in cyberspace. Many banks and traditional lenders offer discounted rates if you apply online, while Internet-only lenders have very low costs and can offer very low rates as a result. Some of the cheapest loans come from firms you might not have thought of: for example at the time of writing, Marks & Spencer has an APR of just 6.7% while Tesco, Sainsbury's and various Internet-only lenders have similar deals available.
The cheapest loans tend to be for reasonable-sized amounts, and if you borrow less than £3,000 you'll find rates increase sharply. You'll need a decent credit rating too: if you don't, then you'll have to go for an "impaired credit" loan with a firm such as Black Horse, which has a rather scary 20.9% APR.
Don't just head for the lowest APR, though: the cheapest loans aren't necessarily the best long-term bet. If a loan has a variable APR, if interest rates rise then so do your payments; fixed rate loans can be a better bet, but if interest rates fall your payments won't. If predictable payments are your key concern, we'd recommend a fixed rate loan.
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