Personal loans just got cheaper again as Zopa cuts its rates to just 4.8%.
The cheapest-ever personal loan
Zopa has dropped its rate on personal loans between £7,500 and £15,000 to just 4.8%.
What's more, you can have between two and five years to pay it off, making it the cheapest loan of this size ever.
Zopa takes the lead
There's been a lot of competition between lenders to offer the cheapest personal loan recently, but Zopa is now clear at the top of the best buy table.
If you haven't heard the name before, Zopa is one of a growing number of so-called peer-to-peer lenders. These companies offer people the opportunity to lend their money to other people. Savers have been flocking to take advantage of interest rates that easily beat the returns they could get from high street savings accounts.
Hitachi Finance, an arm of the famous Japanese electronics company, is offering a rate of 4.9% for loans of this size over the same timeframe, but this rate is reserved for existing customers. Anyone else has to apply for Hitachi's more expensive 4.9% deal.
These two lenders are ahead of traditional banks like Clydesdale and Derbyshire, who are offering a rate of 5% to borrowers.
If you want to borrow between £7,500 and £7,800 and you're looking for an even better rate, Zopa also has a tiny window of opportunity to bag a rate of 4.7% if you can pay it off over two years. However, monthly repayments would work out at £327.70, which might be a struggle compared to spreading the cost over a longer period.
You can find the best rate for the amount you want to borrow using our comparison tables. But here are some example costs if you wanted to borrow £8,000 over five years.
*Available to existing M&S Bank customers only
As you can see borrowing £8,000 over five years with Zopa means the total amount repayable stays under £9,000 and you pay back £991.60 in interest.
Loans for lower amounts
Somewhat bizarrely, if you want to borrow less, you'll pay more interest. Here's an example of rates for £5,000 repaid over five years.
*Available to existing M&S Bank customers only
However, if you can pay it back within three years or less, you can get a rate of 5.8% from Zopa or 6.1% from RateSetter, another peer-to-peer website.
Loans for larger amounts
Meanwhile, Sainsbury's and Tesco were fighting it out at the top of the best buy table for customers looking to borrow more than £15,000. However, they've now been knocked off top spot by Clydesdale Bank.
Here's how rates look if you want to borrow £17,500 over five years.
*Available to existing M&S Bank customers only
If you're wondering what the difference between a Sainsbury's Standard Loan and Reward Loan is, the Reward Loan earns you more Nectar points. But, as you can see, it also costs more.
Watch out for headline rates
Lots of lenders are boasting attractive headline rates at the moment.
But the interest rate advertised on a personal loan won't be offered to everyone who successfully applies. This is because lenders are only required to offer their best rate to 51% of people who applied.
The interest rate you're offered will depend on your own financial situation so it's worth checking out your credit score before applying.
You can get a free 30-day trial of Experian's Credit Expert, which will give you your credit score and therefore how likely it is that you'll get the loan at the advertised rate.
Compare personal loan rates
Want to spread the cost of a large purchase and pay no interest? Compare 0% purchase credit cards
