The ten best personal loans!

If you're short of a few bob, then a personal loan could be the answer to your prayers. John Fitzsimons rounds up the best loans in the market.

Let's be honest, personal loans have a pretty grim reputation, which is not helped by the God-awful ads used to push them in the breaks on daytime telly. But, for a select band of the population, such loans can be invaluable in sorting out their finances and getting back on their feet.

What is a personal loan?

A personal loan is an unsecured debt - in other words, it's money that's not raised against an asset, such as a property - which can be used for a variety of reasons. Perhaps you want to do some home improvements, or want to consolidate your existing debts into one place?

Some people take out such loans for a whole host of flippant reasons, such as improving their car or going on holiday, which is just daft in my view.

However, if you really do need the money, then there are some very good personal loans out there at the moment.

Things to consider with personal loans

Before we get to those, there are several things you need to consider when taking out a personal loan.

PPI

First up is everybody's favourite issue, payment protection insurance (PPI). This is a policy which will cover your payments should you be unable to meet them due to accident, sickness or unemployment.

Here at lovemoney.com, we've made our feelings on this particular piece of insurance abundantly clear in the past - it's a bit dodgy, overpriced, and can hike up the cost of your loan significantly. When the time comes to go for a personal loan, chances are the provider will fall over themselves trying to get you to sign up.

As always, my advice is to avoid taking out a policy with the lender before you have done your research. The vast majority of the time, you will get at least as good a policy at a much better price by going for a standalone provider, rather than the lender.

Typical APRs

By law, only two-thirds of lenders need to offer the typical APR, so be wary when applying, as any adverse credit history might see you hit with a higher rate of interest.

Early repayment charges

All of my recommended products (below) charge one month's interest should you settle your loan early, which is not too bad compared to some other loans in the market.

However, if you're likely to settle the loan early - and research has suggested that almost three-quarters of personal loans are settled early - then it might be worth searching for deals that charge no early repayment charges.

For further tips on what you should consider, read Dos & Don'ts With Personal Loans.

So without further ado, onto my recommendations! I have put together my favourite loans, both for those with a requirement for a small top up of cash and a larger loan.

Smaller personal loans

Below are the five products I believe are best for those of you requiring a smaller loan. I have based this on the need for a £5,000 loan, repayable over the course of three years.

A more sizeable loan

Of course in many cases, the sums required are a bit bigger, so the rest of my recommendations are based on a £10,000 loan, repayable over the course of five years.

All of the products in both of the above tables are open to all applicants.

However, in both cases, Sainsbury's has an alternative personal loan (also available at 7.9%) open to Nectar cardholders, while Tesco Personal Finance offers a loan at 7.9% to existing customers. What's more, for the larger loan, Nationwide building society also offers a personal loan to existing customers at 7.9%.

The decision to take out a sizeable personal loan should not be taken lightly, but there are some decent products out there. But whatever you do, always make sure you know exactly what you are signing up to, and how much it will cost you in the long run.

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