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Does your bank charge 27% APR for a £1,000 loan?

Which? research shows it's vital to shop around

If you’re looking for a personal loan from a major bank, the rate you pay could be anywhere between 6.5% and 27% depending on the amount, the term and the lender. We round up the banks’ current rates.

Find the best way to borrow

The personal loan market has become much more competitive over the past year, with improved deals on offer from supermarkets and other retailers in particular. And yet, with Bank of England base rate still at 0.5%, some lenders’ rates remain very high, making it vital to shop around for the best deal.

Which? principal researcher Martyn Saville commented: ‘We often complain about the high interest rates charged on some credit cards, but loans can be just as expensive. For loans of £1,000 you can expect to pay an APR of around 20% – higher than the rate on an average credit card.

‘If you do need to borrow, it’s worth considering alternatives such as credit union loans, authorised overdrafts and credit cards. For example, a £1,000 RBS/NatWest loan for 12 months at 27% would cost you £136 in interest. For big purchases or to repay existing debt, you could be much better off with a credit card offering a long 0% period.’

The best and worst loan rates

The cost of personal loans
Provider £1,000 over 1 year APR (%) £5,000 over 3 years APR (%) £10,000 over 5 years APR (%)
Bank of Scotlanda 23.9 19.9 9.9
Barclaysa 24.9 20.9 19.4
Barclaysa,b n/a 15.6 9.9
First Directa 15.9 8.9 6.8
Halifaxa 23.9 19.9 8.8
HSBCa 21.9 16.9 6.9
Lloydsa 20.9 13.9 11.3
M&S Money 19.9 12.9 6.7
Nationwidea n/a n/a 6.5
NatWestc 27 17.6 9.9
Post Office n/a 8.4 7.4
RBSa,c 27 17.6 9.9
Sainsbury’sd 18.6 8.1 6.7
Santander 18.9 8.6 7.4
Smile n/a 13.9 9.9
Tesco n/a 8.7 7.4
The Co-operative n/a 13.9 9.9

Table notes

  1. Loan available to existing customers of lender.
  2. ‘Barclayloan Plus’ loan available if you have had a well-managed account for 12 months
  3. NatWest/RBS Gold/Royalties customers pay 1% less for online applications
  4. Loan available to Nectar card holders

Which? Best Rate personal loans

If you’re looking for a bigger loan over a longer period, it’s worth shopping around as rates differ significantly. Longer repayment periods and larger amounts tend to be cheaper – we found that they can go as low as 6.5% for a £10,000 Nationwide loan repaid over five years.

It’s also important to remember that most loans are risk-based, meaning you could pay a higher interest rate if you have a less than perfect credit score. Read our guide to credit scores for more details.

Our Best Rate loans tables show the most competitive lenders in the market. It’s also worth checking out our Best Rate credit cards

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