Top 4 responsible personal loans

Written by Lori Campbell on 24th Jul 2023

There are many reasons why people might take out a personal loan (often known as an unsecured loan if your property or car would not be at risk if you did not pay it back). Some people use them as a way of paying for a big project, such as a new kitchen, while for other people taking out a large loan may be a way to deal with debt.

Sadly the cost-of-living crisis is forcing more people to take out personal loans to keep their heads above water. According to Experian, the number of personal loan accounts in the UK increased by 16 per cent to 25.1 million in 2022.

A word of warning: While recent rises in interest rates is good news for savers, unfortunately it’s the opposite for those taking out personal loans or other debt. Always check the rate you are being charged before committing to a loan, and ensure you can afford the repayments. Personal loans are not a sustainable option for paying general living costs.

Personal loan providers are generally not known for their ethics, particularly when it comes to dealing with those who have a poor credit record. However, some lenders place caps on interest charges and have good records on the environment and helping the local community as well. Here are some Good choices.


1. Credit Unions

Credit unions are usually small, not-for-profit lenders with a tie to a particular area or type of employment. Those who use a credit union must have a ‘common bond’, which means that not all of these organisations are open to everyone.

You can find ones close and relevant to you by searching on, which is run by ABCUL, the Association of British Credit Unions Limited.

The rates offered by credit unions for small loans are far better than those from payday lenders, and many will consider those with poor credit histories. They also offer special loans for difficult circumstances, for example for those who are struggling to pay for household goods and would otherwise use expensive catalogue finance.

Top 6 ethical current accounts

2. Metro Bank

Metro Bank also scores highly on the Ethical Consumer scorecard, thanks to a lack of the legacy ethical issues associated with the biggest banks.

For its personal loan product, Metro Bank has teamed up with RateSetter to give you a personalised quote. You can borrow between £1,000 and £35,000 over a term of one to five years (subject to approval), and rates start at 6.9 per cent APR. The bank – which famously prints its bank cards in store so customers can have them immediately – also says that you could have your loan the same day. Applicants must have a suitable credit score for the amount borrowed.

3. Nationwide Building Society

Britain’s biggest mutual Nationwide offers personal loans for existing customers with rates from 7.9 per cent APR for loans over £7,500 for those with a current account, savings account or mortgage with the society. Repayment can be spread over seven years, with a maximum loan amount of £25,000 available (minimum £1,000). The group scores highly on both the Ethical Consumer and the Good Shopping Guide thanks to a robust ethical policy.

4. Monzo

Monzo, another bank without the legacy of fossil fuel funding, promises you’ll find no hidden fees, early repayment charges or confusing terms. It also won’t make you wait – once approved, the money will be in your account in just a few minutes. However, its interest rates aren’t the most competitive out there. Loans of £10,000 to £25,000 currently have an interest rate of 13.8 per cent APR and loans up to £10,000 will cost you a hefty 27 per cent APR.

Find out more about Monzo in our full review

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