To make comparing even easier we came up with the Finder Score. Speed, features and flexibility across 60+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the lender – simple.
Read the full methodologyPlease note: You should always refer to your loan agreement for exact repayment amounts as they may vary from our results.
Late repayments can cause you serious money problems. See our debt help guides.
It’s not a daft question. If you can get approved, then what’s called a “0% purchase credit card” is probably the cheapest way to borrow £1,000. These cards give you a set number of months of 0% interest on purchases, as the name suggests. There are a couple of key details to note, however. Firstly, that offer sometimes only applies to purchases made in, say, the first 60 days (check the terms). Secondly, after the 0% period is over, a horrible interest rate kicks in – typically over 20%.
All card issuers can now tell you whether you’d be likely to get approved for one of their cards, without any impact on your credit score (they do a “soft search”). That’s actually really great. What’s not so great is that most of them won’t tell you in advance what your credit limit would be. To find that out, you may have to under go a full credit check. Lloyds Banking Group (which includes Halifax and MBNA) is one of the few card issuers that does give you an indication of your credit limit from just a soft search (we think they all should!). The good(-ish) news is most mainstream banks aren’t that interested in issuing cards with limits below £1,000, so they’d probably just say “no”.
Another type of credit card that might be of interest is a “0% money transfer credit card“. These cards let you transfer money from the credit card to your current account. Sounds good, right? But the catch is a “transfer fee” – typically of about 3%.
Borrowing for longer usually brings monthly repayments down to more affordable levels. However it also pushes up the total cost of borrowing, making it important to secure a competitive rate. Here are some examples of £1,000 loans at varying rates and loan durations.
| Interest rate of 5.0% fixed p.a. | Interest rate of 10.0% fixed p.a. | Interest rate of 15.0% fixed p.a. | |
|---|---|---|---|
| 1 year term | £85.61 monthly, £1,027.29 overall. | £87.92 monthly, £1,054.99 overall. | £90.26 monthly, £1,083.10 overall. |
| 2 year term | £43.87 monthly, £1,052.91 overall. | £46.14 monthly, £1,107.48 overall. | £48.49 monthly, £1,163.68 overall. |
| 3 year term | £29.97 monthly, £1,078.95 overall. | £32.27 monthly, £1,161.62 overall. | £34.67 monthly, £1,247.95 overall. |
This is almost certainly not a sound option. These lenders will never approave a £1,000 loan to a new customer, and if they do, it’ll be extremely expensive. You should look at all other conceivable options first! Read more about alternatives to short-term loans at moneyadviceservice.org.uk or on Finder.
| 3-month instalment loan from a well-known Short-term lender | 1-year personal loan from a well-known high street bank | |
|---|---|---|
| Availability | Because spreading repayment makes for smaller, more affordable instalments, lenders may be willing to lend larger amounts if you opt for an instalment loan over a payday loan. Like a payday loan, it’s normally a quick and simple process, with plenty of lenders willing to focus more on affordability than credit history. | Personal loans are available from high-street banks, supermarkets and specialist companies. £1,000 is at the lower end of the amounts available. It can be a slower process with stricter eligibility requirements than a short-term loan, but it is quicker and potentially easier if you choose a lender you already bank with (although not necessarily the cheapest option). |
| Fixed interest rates | 267.75% p.a. | 13.5% p.a. |
| Repayments | 3 monthly repayments of £492, or 13 weekly repayments of £110.08 | 12 monthly repayments of £89.55 |
| Set-up fees | £0 | £0 |
| Total cost of borrowing | £476.01 | £74.62 |
| Can I overpay/repay early? | Yes, at any time. This saves you money in interest. | Yes, at any time, but it might not save you as much as you’d expect (you are charged up to 58 days’ interest on the amount repaid). |
Bear in mind that these are not the only credit options available. You may wish to consider a credit card or an overdraft facility.
An overdraft is likely to be a punishingly expensive way to borrow £1,000 (unless you’re a student with a chunky interest-free overdraft!). But ultimately it’s a question of comparing the rate you’d be charged on an overdraft vs the rate you’d be charged on a loan or credit card.
Don’t forget that overdrafts, credit cards and personal loans all have different repayment requirements. Overdrafts can drag on indefinitely, which is likely to be super-expensive. At the other end of the spectrum, personal loans are designed to be fulfilled at an exact point in time, so you know in advance what they’ll cost you each month and overall.
Eligibility requirements vary from lender to lender, but expect to need to meet at least the following criteria:
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