Low Interest Loans

Who can get a low interest loan?

My Community Finance works with credit unions that provide low interest loans with APRs ranging between 9.8% and 42.06% to their members.

To be eligible for a low interest loan from one of our partner credit unions, you’ll need to pass the relevant affordability and credit checks, which will be run by the credit union when you apply. Additionally, you’ll need to meet the following eligibility criteria:

• Be between the ages of 21 and 65

• Be employed and earn £18,000 a year or more

• Live in the UK (excluding Northern Ireland, the Channel Islands and the Isle of Man)

Credit unions are not-for-profit organisations, so any profit made through borrowing is returned to members or reinvested back into the credit union. 

Before applying for a loan from one of the credit unions we work with, you’ll need to become a member. Whilst membership criteria can vary between credit unions, our partner credit unions accept members from almost all fields of employment and members of organisations such as the National Trust and the Co-op. 

When you apply for a loan via the My Community Finance website, we’ll match you with the credit union that best suits your circumstances.

Can I get a low-interest loan?

The amount of interest you’ll pay on a loan will depend on a few factors, such as your interest rate, loan term and the amount you borrow. 

Interest is charged as a percentage of what you owe, so the more you borrow, the more you’ll pay in interest. Your loan term, or the length of your loan, will also impact how much interest you’ll pay. 

Whilst longer loan terms may bring down your monthly payment, your loan will accrue interest for longer, meaning overall, you may end up paying more in interest than if you borrowed over a shorter period.

When you apply for a loan with one of our partner credit unions, you decide how much you want to borrow and how long for, then they will let you know if they are able to offer a loan and what the interest rate would be.

Interest rates are typically based on how much risk you pose as a borrower; if you have a good credit score and a history of making repayments in full and on time, not exceeding your credit limits and generally being a reliable borrower, you’ll be more likely to be approved for a loan with a lower interest rate. 

Can I get a low interest loan with bad credit?

There are three major credit reference agencies: Experian, TransUnion and Equifax. Everyone in the UK will be categorised by credit reference agencies as having either an ‘Excellent’, ‘Good’, ‘Fair’ or ‘Bad’ credit score.

Credit unions offer affordable loans to those with fair credit, who would normally be charged a high amount of interest for borrowing from other lenders.

To find the cheapest personal loans available to people with fair credit scores, it’s important to do your research and compare APRs of different lenders. 

If you have a bad credit score, it could be a good idea to try and improve it before applying for a low interest loan with one of the credit unions we work with. 

How can I get the lowest APR on a loan?

In order to receive the lowest personal loan rates, you’ll need to have a good credit score. If you’re worried about being turned down or that you won’t receive a good interest rate, you could take steps to improve your credit score before applying. 

Here are some things that might help boost your credit score:

• Pay all your bills and credit repayments on time and in full - this helps to demonstrate that you’re a reliable borrower.

• Avoid multiple hard credit searches in a short period of time - making lots of applications for new credit products within six months can appear to lenders like you’re in financial difficulty. 

• Ensure all the information on your credit report is accurate - look through your credit report regularly; you can do this for free with apps and websites such as Experian, Clearscore and Credit Karma. Make sure all your information is up to date. If you do spot any errors, let the credit reference agency know ASAP. 

• Make sure you’re on the electoral roll - whether you’re planning to vote or not, being on the electoral roll is a good way of proving your fixed address. 

• Don’t withdraw cash on a credit card - withdrawing cash on a credit card will incur immediate interest charges and a fee. It may appear to lenders that you are in financial difficulty.

• Try to keep your credit card utilisation low - try to use less than 25% of your credit card limit. Remember, it’s a limit and not a target. Using more than 25% of your available credit can put some lenders off and may suggest that you’re in financial difficulty.

How much can I borrow with a low-APR loan?

The credit unions we work with offer low interest personal loans between £1,500 and £25,000.

The amount you can borrow will depend on your personal circumstances, such as your affordability and what you want to borrow the money for. The amount your loan will cost will depend on your interest rate and loan term. 

You can use our loan calculator to get an idea of how much your monthly repayments could be - but remember, the calculator uses a representative APR, the amount of interest a typical borrower will pay, and your interest rate may be higher or lower depending on your personal circumstances.

Can I get an interest-free loan?

The credit unions we work with don’t offer interest free loans.

Regulated lenders don’t currently offer interest free personal loans in the UK financial market.

However, you may find interest free overdraft and credit card deals on offer.

What is interest on a loan?

On a loan, interest is the cost of borrowing - it’s how lenders make their money. When comparing loans from different lenders, the interest rate is displayed as the annual percentage rate - APR. The higher this figure is, the more expensive the loan is.

The credit unions My Community Finance work with are not-for-profit organisations, which means any money made from lending is returned to its members as interest on savings or reinvested back into the credit union to improve services for their members. 

Is loan interest monthly or yearly?

When you apply for a loan with one of our partner credit unions, you’ll receive a personalised interest rate, which will be quoted annually.

The APR on all of our loans are fixed, which means your interest rate won’t change during your loan term, and your monthly repayments will remain the same each month. 

What is APR?

APR is short for Annual Percentage Rate. It's a number showing the expected cost of your loan on a yearly basis assuming you make all payments on time.

How we calculate the APR is set by law and is intended to allow you to compare credit offers.