Borrow smart for big spends
For a large one-off purchase, the cheapest borrowing isn't always the obvious one. The best option balances the interest rate, the repayment term, and whether you want to risk any security. Match the finance to the amount and how quickly you can clear it.
1. Unsecured personal loan
The default for £5,000–£25,000 — fixed rate and term, no security. Best for cars, weddings and major one-off costs where you want predictable payments and your home isn't at risk.
2. 0% purchase credit card
For amounts you can repay within the interest-free window, a 0% purchase card is the cheapest route. Best for smaller large purchases (a few thousand) you can clear in 12–24 months.
3. Secured loan
For very large sums, a homeowner secured loan offers lower rates over longer terms — but your home is at risk. Best when the amount exceeds what's available unsecured.
4. Specialist finance (e.g. car finance)
For cars, dedicated products like HP or PCP can be competitive and sometimes 0% — but compare the total cost (and any balloon payment) against a personal loan, which leaves you owning the asset outright.
5. Saving and spreading the cost
If the purchase can wait, saving avoids interest entirely. Even part-saving reduces how much you borrow and the interest you pay.
Which is best?
- £5,000–£25,000, want certainty: personal loan
- Clearable within ~2 years: 0% purchase card
- Very large sum, homeowner: secured loan
- Buying a car: compare car finance vs a personal loan
How to find the best loan
A whole-of-market broker compares options to find the lowest true cost for your amount and credit. Find a loan broker through Nesto — free, no obligation.
Frequently asked questions
What's the cheapest way to fund a large purchase?
Often a 0% purchase card if you can clear it in time, otherwise a personal loan. Saving avoids interest entirely.
Is car finance or a personal loan better for a car?
A personal loan leaves you owning the car outright; car finance (HP/PCP) can be cheaper or 0% but compare total cost and any balloon payment.
How much can I borrow on a personal loan?
Typically up to £25,000–£50,000 unsecured for strong applicants; larger sums usually need a secured loan.
Does a large loan hurt my credit?
A new loan causes a small dip, but reliable repayment builds your score. High balances relative to income can affect future borrowing.
Should I save or borrow?
If you can wait, saving avoids interest. If not, borrow the minimum needed over the shortest affordable term.