We thought it was about time for an update review on cheap personal loans. Given the recent rises in interest rates are they still cheap? Who's offering the best value loans deals? What do you need to look out?

Review published 22th July 2007.

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The latest of our hot spot reviews on cheap personal loans. We'll take a quick look at the surrounding market conditions, company offering special deals and the rates you can expect to find this summer.

Cheap loans are what everyone looks for when they need to borrow money and the loan companies recognise this and try to position their products with headline low rates in order get their share of business. In fact the rate you will likely be offered has as much to do with your own circumstances as the company you are dealing with, but nevertheless there is no point in paying more than you need to, or getting into a loan deal that will cost you in fees if you need to change the original terms - and many people do!

So this month the cheapest personal loan rate we could find was Barclaycard at 6.3%, but based on past experience we recommend you check the details of the offer carefully as Barclaycard has a history of offering attractive low rates, but then dropping the bombshell that they only apply to existing Barclays or Barclaycard customers - other people will be offered worse terms. Next up was 6.5% being offered by Masterloan and then 6.9% from Tesco Personal Finance. These 3 deals were for £10,000 loans or over when the customer takes insurance at the same time. When not taking insurance 6.3% to 6.5% will be the best you'll get at the moment (six months ago 5.6% was commonly on offer). In the case of smaller loans, say a £5000 loan repaid over 3 years, you can still get similar rates, but be careful when you ask your bank or building society for a small loan - they tend to hike up the rates. As we reported previously, for loans less that £7000 Halifax will charge you a staggering typical rate of 15.6% and that is not unusual. When we looked in February this year, HSBC and NatWest did not clearly show their rates on their websites for smaller loans. This time Natwest again tried to contact me online while I was looking at their site (a bit cheeky). As you can read in an earlier report they wouldn't tell me their rates, so this time I went to their loan calculator and found that smaller loans can attract rates of up to 17.7% if you only want to borrow £2500. As they like to say at NatWest there is "Another Way" - there certainly is! For secured loans, Sterling Credit offers an attractive typical rate of 6.8% for loans larger than £26,000, which is only slightly up on the Paragon best rate of 5 months earlier. Picture Loans come in next with 7.2% for £10000 loans and above. So proceed with caution when you read headline grabbing offers for cheap personal loans, many companies are blasting out messages showcasing their best deals for larger loans, but the truth for the smaller loan may come as an expensive shock. Review published 22nd July 2007.

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