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AA Personal Loan

The AA Personal loan only really becomes competitive at higher rates, although you won't be penalised for borrowing over a longer period, and is of course from a trusted brand. If you need to consolidate debts over a long period, this may be helpful.

AA Personal loan examples (correct at publication date, uninsured):

  Monthly Repayment APR
£3000 across 2 years £138.98 10.9%
£5000 across 5 years £98.94 7.2%
£10000 across 7 years £150.79 7.2%

Often the right loan to go for depends on what you're going to use the money for. On the face of it, the AA Personal loan doesn't offer the best rates, especially at the lower end of the market. The cheapest AA Personal loan rate of 6.7% is reserved for people borrowing over £20,000, and as the supermarkets will offer you 6.9% for borrowing only £5,000; this is pricey.

However, unlike some providers, rates don't depend on the length of term- whether you borrow for one year or the maximum 7 years, the quoted APR won't change. This means that if you're borrowing for debt consolidation (and don't forget that some of the debt management companies you see on TV charge far higher rates) you can borrow over a longer term effectively without penalty.

Furthermore the "AA Creditcare" protection scheme is excellent- if your household doesn't have another income to fall back on, this could be a major factor in your decision. The extra premium for the protection policy isn't extortionate, and if you claim, benefits begin after only 15 days sickness or unemployment, compared to 30 days for the majority of policies. If you're borrowing on an already stretched lifestyle this might be crucially important.

There are no arrangement fees, and if you're consolidating payments, be sure to use the AA Personal loan site's budget calculator and "How much can I afford" sections. (There's no point getting a loan to cover existing debts or store cards if all you're doing is moving unmanageable debts around- if necessary seek advice from a Citizens Advice Bureau; lenders are also required to lend responsibly.)

The AA Personal loan offering proves itself most valuable at high values over long periods of time, so it's probably best compared with a remortgage (if you have that option). Plus of course, compare any benefits of long-term borrowing against the fact that you're in hock for 5-7 years.