Best unsecured loan rates, and will I qualify?

Unsecured loan rates are at an all-time low, which is good news for borrowers who want those additional funds for some home improvements, car or even a long overdue holiday.

However loans can be somewhat of a technical minefield and you may not get the rate that you want, or the one that you saw advertised.

So how do you get the best deal?

Do your research, read anything and everything that you can, but as a general rule, the more money that you wish to borrow, the more competitive the rate will be.

Shop around and make sure you compare APR’s. The APR (annual percentage rate) tells the true cost of a loan taking into account the interest payable, any other charges, and when the payments fall due.

Use your loyalty! Sometimes being an existing account or cardholder with a particular lender, means that you are entitled to better rates so try these first.

Find out what your credit rating is using Equifax, Experian or Callcredit.Be realistic, the higher your credit score the more likely it is that you will be accepted for the most competitive and best rates

Even if your credit score isn’t perfect there are still options. Lenders still consider those with less than perfect credit.

Check the small print, are there any qualifying terms and conditions that you must meet before you are eligible. Make sure you know your rights under the law. Since February 1st 2011, EU rules mean that early part repayments are allowed. Banks do charge for any early repayments, but it is limited to 1% of the amount repaid (if the loan is over 12 months) or 0.5% (if under 12 moths.)

Loan providers must also allow for any early repayments which is usually one or 2 months interest charges as a penalty

Consider all the options, credit cards can if used correctly be a good way to borrow money depending on your individual circumstances, or perhaps check out peer-to-peer lending

Remember the whole point of balance transfer deals on credit cards is to shift debts to them at a reduced rate, the best being the 0% deals.

Terms and conditions apply on all loans depending on how long you borrow for, and the rates that you are offered will vary considerably, depending on your credit history and individual financial circumstances.

For loans up to £5,000, the best deal is offered by peer to peer lender Ratesetter who offer a rate of 4.4%, with Zopa only slightly higher charging 5.3%.  The Lending Works charge 6% on the same amount. For unsecured loans between £5,000-£7,499 the best rate is offered by TSB at a rate of 3.3%, with Hitachi personal finance charging slightly more at just 3.4%. Zopa and M&S Bank both charge 3.6% with M&S offering up to a 7 year repayment period. Sainsbury’s Bank offer a rate of 3.7% over a 3year period, but you must have a nectar card to obtain this rate. Anyone without a card will be offered a rate of 3.8%.

The best rates are offered the more money that you borrow and lenders typically offer the best rates to those borrowing between £7,500-£15,000. Currently M&S Bank is the cheapest lender, charging just 2.8% on a repayment term of up to 7 years. TSB Bank charges only slightly more at 2.9% on loans form £7,500-£20,000, but the loan must be repaid within 5 years.

Sainsbury’s bank also charge 2.9% but only to loyalty customers that have a nectar card, for borrowing of up to £20,000 over a 1-3 year period. This special loyalty-rate is 0.1% lower than it offers to new customers. For those that need a longer repayment period, loans lasting between 4-5 years are charged at a higher interest rate of 3%.

Peer to peer lender Zopa charge 3% on loans from £7,500-£20,000 over a 5 year period, with Hitachi personal finance charging 3.1%.

The Nationwide building society reward existing current account holders by guaranteeing a 0.5% rate reduction on any unsecured loan offered to one of their customers.  The rate they currently offer on those wanting to borrow £7,500-£14,999 is 3.4%, so although it is competitive, it is not the cheapest on the market.

For those who need to borrow £15,000+ the rates are also extremely competitive. TSB Santander-owned Cahoot and Sainsbury’s bank all offer their best rates up to £20,000. Furthermore, those customers with a Tesco Clubcard can take advantage of a 3.1% rate on loans of £10,001 to £25,000 over a 7year repayment period. First Direct account customers qualify for a 3 % rate on loans up to £30,000 over a 7year period. With Yorkshire Bank and Clydesdale offering rates of 3.9% for unsecured loans up to £25,000.

Unsecured loan amounts do extend further than those mentioned above however. First Direct hit the headlines when they were the first lender to extend borrowing to a whopping £50,000. They offer rates of 6.7% on loans between £30,000-£50,000, with repayment terms from 1-7 years, but you must be an existing account holder. Tesco Bank offer clubcard holders a 6.7% rate on a maximum borrowing of £35,000 over an 8year repayment period. Sainsbury’s offer up to £40,000 over a 5 year period at a rate of 6.8%, which increases to 8.8% for an extended repayment time period of between 5-8years.

However, if for whatever reason you do not qualify for one of the above unsecured loans, as a credit broker that specialises in bad credit loans, we can help, all you need to do is apply here and let us find the right loan deal based on your personal cicumstances.