Compare £5,000 Loans: Best Rates and Lenders

The Annual Percentage Rate (APR) represents the yearly cost of borrowing money, taking into account the interest rate and any standard fees. Lenders are required to show you a representative APR to help you compare deals, which is the rate that they expect at least 51% of applicants will receive. Your personal APR could be the same as this rate, but it may also be higher or lower.

The best rates for a £5,000 loan will be available to people with a good credit history. Lenders usually look at several factors when deciding whether to accept your application, such as your credit history and financial situation, which also influence the rate you receive. Your rate also depends on how much you want to borrow and the loan term you choose.

It’s important to make sure you can afford the monthly repayments and that you’re comfortable with the total cost of the personal loan.

Shorter loan terms make the loan less expensive, but your monthly repayments will be higher. Longer loan terms reduce your monthly repayments, but you’ll pay more interest overall.

Checking your credit score helps you to be confident about applying for a loan. Your credit score illustrates how the lender may view your application:

• a good credit score means it’s more likely that your application will be accepted and that you’ll receive a good interest rate 
• a bad credit score indicates that your options for borrowing are more limited and that credit will be more costly for you – your application could be rejected altogether 

If you have a bad credit score and don’t need the money right now, you might choose to improve it before applying for a loan. 

Improving your score can unlock more options for borrowing £5,000 and make the loan a lot cheaper for you. You’ll need to give yourself six months to a year to build a record of making repayments on time.

When comparing loans, features like the ease and speed of the application process and the flexibility you’ll have around making repayments may influence your choice. 

For example, can you pick a monthly repayment date that suits you? And if you think you’ll be able to settle the loan earlier than planned, will the lender charge any fees?

NerdWallet’s star ratings take product features like these into account. We review the personal loans market each month, evaluating and rating loans from the UK’s lenders based on 20 of the features that customers have told us are most important.

This information is gathered from each lender’s website, company representatives and the independent financial product analyst Defaqto. In addition, we regularly add new brands and our editorial team reviews them against the same criteria for consistency and accuracy. 

Our star ratings are based on this data across all products and features and presented on a scale of one to five stars, where a one-star score represents ‘poor’ and a five-star score represents ‘excellent’.
Read more about our review methodology and what we mean by ‘best’.

Debt consolidation is when you take out a loan to pay off several existing debts. Rather than making multiple monthly payments to different lenders, consolidating your debts can simplify your financial obligations by creating a single monthly repayment.

If you’ve taken out higher interest loans before, for example a payday loan or short term loan, or you have credit card debt with expensive monthly interest charges, debt consolidation could make your debt cheaper overall.

Depending on how much you owe, a £5,000 loan could be a suitable option for debt consolidation but it won’t be right for everyone. It’s important to crunch the numbers and make sure that consolidating your debts won’t be more costly for you. You can do this by comparing APRs on your existing debts against the APR of the debt consolidation loan. If the APR on the new loan is significantly lower than your current debts, your overall borrowing will likely become cheaper. You can also get free advice from a debt charity such as StepChange before going ahead.

You’ll need to request settlement figures from your existing creditors, which should take into account any interest and early repayment charges. You can also use a personal loan calculator to see how much your new loan will cost overall.

Home improvements can help you get more from your home and often add to its value in the process, but costs can add up. After coming up with a plan for your home, a £5,000 home improvement loan could help you get started quickly.

You can buy a car or another vehicle with a regular unsecured personal loan – £5,000 may be the amount you need if you don’t have all of the money to hand already.

Make sure you compare the interest rates on £5,000 loans and any fees against other options for funding a car purchase, such as car finance.

A loan can help you spread the cost of a holiday, with £5,000 potentially helping you pay for longer trips or costs for the whole family.

But keep in mind that it’s often best to wait and save money for a holiday. Taking out a £5,000 loan for a holiday can saddle you with years worth of repayments. It may be a good idea to use your savings, or to apply for a smaller loan to use in conjunction with existing savings, to help cover your holiday costs.

The average cost of a UK wedding is more than £20,000. You may not need to borrow money to cover the whole cost of a wedding, with £5,000 being how much you need to help make your day special.

There are lots of factors to consider when planning your wedding, so make sure you’ve completed a budget and are confident that £5,000 is the amount you need.

Further education and courses can help you increase your earning potential, but they’re usually expensive. Whether you’re looking at university education or courses from another institution, £5,000 can help you cover course fees along with any exams and course materials. 

Just make sure that an unsecured personal loan is the right option. For example, you may be able to apply for grants and bursaries depending on your situation and what you want to study. Government student loans also come with favourable terms, such as the fact that you only start repaying once your income is over a particular threshold.

Bad credit loans are unsecured options available from specialist providers for people with a poorer or limited credit history. Several bad credit loan providers offer £5,000 loans.

If you have an adverse credit history, bad credit lenders may be more willing to consider your application. However bad credit lenders usually charge higher interest rates to account for the increased risk of lending to someone with a poorer credit history. A £5,000 loan taken over three years could cost more than £2,000 in interest and other charges. 

Secured loans may be an option if you’re looking to borrow £5,000, but the minimum loan size offered by lenders is often higher. Secured loans are more commonly used by people looking to borrow a larger amount.

This type of loan is secured against an asset – usually your property – which means that if you don’t keep up with your repayments, you could lose your home.

A guarantor loan is a type of loan that requires another person on the agreement who can cover your repayments if you’re unable to make them. This person should be someone you trust, for example a family member or close friend.

Guarantor £5,000 loans are available from specialist providers. A guarantor loan can be easier to get than a regular loan because the other person on the agreement reduces some of the risk to the lender. However, the relationship between you and your guarantor could be harmed if they end up needing to repay the loan for you.

You may be able to borrow £5,000 from your local credit union. Credit unions are not-for-profit organisations that give their members access to loans that have capped interest charges.

To become a member of a credit union you will usually need to share a ‘common bond’ with the other members, for example you live in the same area or work for the same employer. Some credit unions allow you to apply for a loan at the same time as applying to join.

While credit cards can be an expensive way to borrow money if you’re unable to clear the balance each month, using a 0% interest credit card for a £5,000 purchase could work out cheaper than a loan.

If you’re eligible, you could get an interest-free period that allows you to repay £5,000 over a set number of months. However, it’s important to make sure you clear the balance by the time the interest-free period ends, otherwise the outstanding debt can become costly.

Be aware that if you don’t keep up with your minimum repayments, the provider may remove the 0% interest-free deal.

To show you how much it costs to borrow a particular amount over a specific period, lenders must display a representative example. This shows:

• An example loan amount, such as £5,000.
• An example loan term, such as 36 months.
• The annual interest rate and whether it’s fixed or variable.
• A monthly repayment amount and the total repayable over the loan term.

It’s a good idea to check your eligibility before applying for a £5,000 loan – many lenders let you do this on their website. 

You usually need to enter details such as your employment status and financial situation. Then the lender carries out a ‘soft’ credit check to work out the likelihood of your application being accepted. Soft searches don’t affect your credit history and only you can see them on your credit report.

The lender may also give you an idea of the interest rate you’re likely to receive, but this won’t be set in stone. The final rate and decision will always come when you apply for the loan properly.

Alternatively, you can use a loan eligibility service, which shows you the loans you’re likely to qualify for based on your financial circumstances and your credit history. Just make sure that the service only carries out a soft credit check.

When you apply for a loan, the lender usually carries out a ‘hard’ search of your credit history. This is a full check that shows on your credit report when a firm asks to see your data. Too many hard searches over a short time can damage your credit file because it suggests that you’re relying on credit. This is why it’s important to feel confident about the likelihood of receiving a loan before applying. 

If you have a poorer or more limited credit history, you might still be eligible for a £5,000 loan from a specialist bad credit lender. But you’ll have fewer options than someone with a good credit history and bad credit loans are a lot more expensive than regular loans. 

If you have a bad credit score and don’t need the money right now, you might choose to improve it before applying for a personal loan. 

Improving your score can unlock more options for borrowing £5,000 and make the loan a lot cheaper for you. You’ll need to give yourself six months to a year to build a record of making repayments on time.