New lowest rate personal Loan

The competition in the personal loan market is (slowly and finally!) heating up. Today Tesco have announced a cut to their personal unsecured loan rates with the rate for loans from £5,000 to £7,499 falling from 8.3% to 7.8% and rates on loans from £7,500 to £15,000 falling from 6.1% to 6.0% - a new low for loans of this size in the market. In addition, for smaller loans Sainsbury's have introduced a rate of 5.9% for loans of 5,000-£7,500 (but you must be a Nectar card holder and be of impeccable credit standing), also a new loan rate for loans of this size. Competion in the unsecured loan market has been poor over the last 4-5 years. After a heady surge in unsecured lending into the financial crisis of 2008, the erstwhile market leads, the HIgh Street banks, suddenly found themselves with increasing bad debts, reducing balance sheets and a waning appetite to lend in any form, especially unsecured. As a result for many years despite a backdrop of falling Bank of England Base rates, personal loan rates shot up and prime borrowers being forced to pay double digit interest rates to borrow unsecured were not unusual. To be fair, the banks just didn't have the money to lend. But the Supermarkets did. Enter Tesco, Sainsburys and M&S among others to the loan market as they attempt to steal market share while the incumbents were wounded. At first they were cautions but still offered good value loans. As time progressed they became more aggressive and competitive with each other and now they are among the Leaders in this market. Though loan amounts tend to be capped at £15,000 and subject to a minimum loan of £5,000 (and there can be other slightly unusual requirements such as Sainsburys requiring you to hold a Nectar card to get a loan!?) they do provide an excellent option for borrowers. Though some banks are providing competition to these rates, most are unable to match them. The only other competitive option is provided by Peer-to-peer lending firms such as Zopa or RateSetter. In fact, if you are prime credit Borrower then the peer-to-peer lenders probably provide you with the best option for a number of reasons:

1. You can check what rate you are eligible (it changes almost daily based on market conditions) without having a full credit check done on your account
2. Fees are low with Zopa, for example, charging only £130 per loan
3. There are no Early Repayment charges so if you can pay it all off sooner - which would save you interest charges - you can
4. Though you are ultimately borrowing from hundreds of small "investors/depositors" the loan will look and feel like a regular loan to you You'll get one drawdown amount and make one monthly payment. Needless to say if you should miss/default on a payment the impact to your credit rating will also be the same.

For more information on what Personal loan is best suited to you, click on our Personal Loans page here or give us a call on 0845 1260350 to discuss your situaiton.