Which lenders offer low interest rates on personal loans?

If you're looking for a personal loan, finding a competitive interest rate is important – but the lowest advertised rate isn't necessarily the cheapest loan for you.

Personal loan rates vary between lenders and can depend on the amount you want to borrow, the repayment term and your individual circumstances. Banks, building societies, credit unions and Community Banks can all offer personal loans, but their lending criteria and approach can be very different.

So, which lenders offer low interest rates on personal loans, and what should you look for when comparing them?

Which lenders offer low interest personal loans?

There isn't one lender that offers the lowest rate to everyone. Personal loan rates change and the rate you are offered can depend on your circumstances and the lender's eligibility criteria.

The main types of lenders to consider are:

High-street banks

Major banks offer personal loans to eligible customers and can have competitive advertised rates, particularly for borrowers with strong credit histories.

However, the advertised rate isn't necessarily the rate every applicant will receive, so it's important to check the representative APR and the total cost of the loan.

Building societies

Building societies also offer personal loans, with their own lending criteria and rates. They can be worth considering alongside high-street banks when comparing your options.

Credit unions

Credit unions are member-owned financial organisations that provide savings and loans to their members. Their approach to lending can differ from that of mainstream banks.

Depending on the credit union, you may need to meet specific membership or geographical requirements before you can apply for a loan.

Community Banks

Community Banks provide another option for people looking for affordable borrowing.

Unlike traditional commercial banks, Community Banks can have a strong focus on supporting their local communities and providing responsible access to credit.

Boom Community Bank is a not-for-profit, member-owned Community Bank offering personal loans.

Does Boom Community Bank offer low-interest personal loans?

Boom Community Bank offers personal loans from £300 to £10,000, with repayment terms of up to 60 months (five years).

The maximum APR is 42.6%. But many members are offered a loan at a much lower rate, it depends entirely on the individual and their credit rating, income etc. Each application is assessed by an individual not an algorithm.

Boom is different from a traditional high-street lender. It is a not-for-profit, member-owned Community Bank, with a focus on providing fair and affordable access to borrowing for people within its common bond.

Rather than simply looking for the cheapest advertised rate, it's important to consider whether the loan is affordable for you and how much you will repay overall.

What is a good interest rate for a personal loan?

There isn't a single interest rate that can be described as "good" for every borrower.

The rate available to you can depend on your circumstances, the amount you borrow and the length of the loan. Someone who qualifies for a lower rate with one lender may not qualify for the same rate elsewhere.

When comparing personal loans, look at the APR rather than just the headline interest rate.

APR takes into account the interest rate and certain other costs associated with the borrowing, making it a more useful figure when comparing different loans.

However, you should also look at the actual monthly repayment and the total amount repayable.

What should I compare when choosing a personal loan?

Before applying for a loan, consider:

• APR – what is the annual percentage rate?

• Monthly repayments – can you comfortably afford them?

• Total amount repayable – how much will you pay back altogether?

• Loan term – how long will you be making repayments?

• Loan amount – does the lender offer the amount you need?

• Eligibility – do you meet the lender's requirements?

• Fees and charges – are there any additional costs?

• Early repayment – can you repay the loan early and are there any charges?

A loan with a lower monthly repayment isn't necessarily cheaper overall. A longer repayment period can reduce the monthly cost while increasing the total amount of interest you pay.

Are credit unions and Community Banks cheaper than banks?

Not necessarily.

The cost of borrowing varies between individual lenders, loan amounts and borrowers. It's therefore better to compare the actual loan you're being offered rather than assuming one type of lender will always be cheaper.

Credit unions and Community Banks can, however, offer an alternative to mainstream banks and high-cost lenders.

For some borrowers, the difference is also about more than the interest rate. A member-owned organisation may take a different approach to lending and financial support than a commercial lender.

Can I get a low-interest personal loan with a poor credit history?

Having a less-than-perfect credit history can make borrowing more difficult, but it doesn't necessarily mean that high-cost credit is your only option.

Different lenders have different lending criteria, and a lender that declines an application doesn't mean that every lender will do the same.

It's important not to make multiple applications simply to find out whether you qualify, as applications can affect your credit file. Checking eligibility where possible can help you understand your options before making a full application.

Most importantly, make sure any borrowing is affordable and that you understand the repayments before taking out a loan.

How much can I borrow from Boom Community Bank?

Boom Community Bank offers personal loans between £300 and £10,000, subject to eligibility, affordability and lending criteria.

Loans can be taken over terms of up to 60 months (five years).

The maximum APR is 42.6%. But many members are offered a loan at a much lower rate.

Why compare loans before applying?

Comparing loans can help you understand the different options available and avoid focusing solely on the headline interest rate.

For example, two loans might have similar advertised rates but different repayment periods or costs. Looking at the APR, monthly repayment and total amount repayable gives you a clearer picture of what each loan will cost.

It's also worth considering whether the lender is appropriate for your circumstances and whether you meet its eligibility criteria.

Frequently asked questions

Which lender has the lowest interest rate on a personal loan?

There isn't one lender that will always offer the lowest rate. Rates change and the rate you receive can depend on the lender, the amount borrowed, the loan term and your individual circumstances.

What is the cheapest way to borrow money?

The cheapest option depends on your circumstances and how much you need to borrow. If you need a personal loan, compare the APR, monthly repayments and total amount repayable rather than choosing based solely on the advertised interest rate.

Are Community Banks cheaper than high-street banks?

Not necessarily. Community Banks and high-street banks have different lending models and eligibility criteria, and rates vary between individual lenders. Comparing the actual cost of borrowing is the best way to assess your options.

Does Boom Community Bank offer personal loans?

Yes. Boom Community Bank offers personal loans from £300 to £10,000 to eligible members, with repayment terms of up to 60 months. The maximum APR is 42.6%, with the rate offered depending on individual circumstances.

What is APR?

APR stands for Annual Percentage Rate. It is designed to help consumers compare the cost of borrowing by taking into account the interest rate and certain other costs associated with a loan.

Should I choose a loan based on the monthly repayment?

Not on its own. A lower monthly repayment can sometimes result from taking the loan over a longer period, which may mean paying more interest overall. Always check the total amount repayable as well as the monthly payment.

What should I check before taking out a personal loan?

Check the APR, monthly repayments, total amount repayable, loan term, eligibility criteria and any fees or charges. You should also make sure the repayments are affordable within your budget.

Find out more about Boom Community Bank personal loans here.