If you need to borrow a large sum of money that you couldn't put on a 0% credit card, then a personal loan could be a good bet.

The rates on such products are extremely low at present, with rates starting from 2.8%.

But before you apply, read on to see how these financial products work and how to get the best possible deal.

Discover the lowest rate personal loans

Compare like for like

Compare like with like (Image: Shutterstock)

Be aware that interest rates change substantially depending on how much you want to borrow. So, when you are shopping around for the best deal make sure you are looking for loans that match your needs.

“It remains the case that lower tier loans are charged more than the representative APR tiers from £7,500 upwards, so borrowers need to remember to compare loans on the exact amount they want to borrow,” says Springall.

Lenders will often put their lowest loan rate on all their posters and leaflets, but that is for borrowing far more than you may need. So, before you commit, make sure you know exactly what rate you’ll be getting.

[Read more: Should we ever be encouraged to borrow?]

Medium loans (£7,500-£15,000)

Here are some of the lowest rates when borrowing £10,000 over three years.

Loan

Representative APR

Monthly repayment

Total amount repayable

M&S Bank Personal Loan

2.8%

£289.78

£10,432.08

TSB Personal Loan

2.9% £290.41 £10,454.76
Sainsbury's Bank Nectar Personal Loan* 2.9% £290.20 £10,447.20

Zopa Personal Loan

3% £290.63 £10,462.68

Sainsbury's Bank Nectar Personal Loan

3%

£290.63

£10,462.68

Clydesdale Bank/Yorkshire Bank Personal Loan

3%

£290.63

£10,462.68

cahoot Low Rate Personal Loan

3%

£290.63 

£10,462.68

AA Personal Loan

3.1% £291.06 £10,478.16

HSBC Personal Loan

3.3% £291.92 £10,509.12

Tesco Bank Personal Loan

3.3%

£291.92

£10,509.12

Tesco Bank Personal Loan for Clubcard Customers**

3.3%

£291.92

£10,509.12

Hitachi Personal Finance
Personal Loan

3.4%

£292.35

£10,524.60

*Nectar cardholders only

**Clubcard customers only

Large loans (more than £15,000)

Here’s what you can get when borrowing £17,500 over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

TSB Personal Loan

2.9% £313.74 £18,824.40

Clydesdale Bank/Yorkshire Bank Personal Loan 

3%

£314.14

£18,848.40

cahoot Low Rate Personal Loan

3% £314.44 £18,866.40

AA Personal Loan

3.1% £314.89 £18,893.40

Sainsbury's Bank Personal Loan

3.1%

£314.89

£18,893.40

Zopa Personal Loan

3% £314.89 £18,893.40

Tesco Bank Personal Loan

3.3%

£316.41

£18,984.60

Tesco Bank Personal Loan for Clubcard Customers* 

3.3%

£316.41

£18,984.60

Hitachi Personal Finance
Personal Loan

3.4%

£317.16

£19,029.60

NatWest Personal Loan**

3.4%

£317.18

£19,030.80

*Clubcard customers only
** Existing customers only

Small loans (£5,000-£7,499)

The smallest loans on offer, which range from between £5,000 and £7,499, are also the most expensive. 

Here are the best buy personal loans, using the example of £5,000 repaid over five years.

Loan

Representative APR

Monthly repayment

Total amount repayable

Lending Works 5 Year Loan

3.2%

£90.22

£5,413.20

Hitachi Personal Finance Personal Loan 

3.4%

£90.62

£5,437.20

Zopa Personal Loan

3.4%

£90.71

£5,442.60

Clydesdale Bank/Yorkshire Bank Personal Loan 3.5% £90.84 £5,450.40

Tesco Bank Personal Loan for Clubcard Customers*

3.5%

£90.84

£5,450.40

Tesco Bank Personal Loan

3.5%

£90.84

£5,450.40

M&S Bank Personal Loan

3.6%

£91.05

£5,463.00

Sainsbury's Bank Personal Loan

3.8%

£91.49

£5,489.40

*Clubcard customers only

Credit Score (Image:Shutterstock)

When shopping around for a loan remember that your personal circumstances will also affect the interest rate you are offered. Lenders reserve their lowest interest rates for the people they think are going to give them the least trouble.

If you have a poor credit rating you will probably be offered a higher interest rate.

Don’t apply for the best possible rate if you know there is a chance you won’t get it. A spate of failed credit applications can have a negative effect on your credit rating.

Some comparison sites will take some details from you and do a soft search on your credit report – this won’t affect your credit rating – then they will show you the loans you are likely to be accepted for.

This can give you a better idea of the rate you are likely to pay on a personal loan.