Tesco slashes personal loan rate to 4.8%
Tesco is holding a personal loan sale until 5th February, featuring the cheapest loan around!
Tesco has cut the rate on its medium-sized personal loans.
Now those looking to borrow between £7,500 and £15,000 over terms of one to five years can apply for a rate of 4.8%, down from 5.1%.
However, the supermarket's rock bottom deal is only a temporary offer. In order to take advantage you will need to apply before midnight on 5th February 2014.
But when it comes to medium-sized loans, is Tesco the best lender to go for?
I have looked at how much it costs to borrow £7,500, £10,000 and £15,000 over five years to find out.
Best for borrowing £7,500 over five years
|
Provider |
APR |
Monthly repayment |
Total amount repayable |
|
4.8% |
£140.50 |
£8,430.00 |
|
|
HSBC Personal Loan |
4.8%* |
£140.50 |
£8,430.00 |
|
5.0% |
£141.15 |
£8,469.00 |
|
|
5.0% |
£141.15 |
£8,469.00 |
|
|
5.0% |
£141.15 |
£8,469.00 |
|
| Zopa | 5.0% | £141.15 | £8,469.00 |
| Clydesdale Bank Personal Loan | 5.0% | £141.15 | £8,469.00 |
| Yorkshire Bank Personal Loan | 5.0% | £141.15 | £8,469.00 |
*Current account customers only
Best for borrowing £10,000 over five years
|
Provider |
APR |
Monthly repayment |
Total amount repayable |
|
4.8% |
£187.33 |
£11,239.80 |
|
|
HSBC Personal Loan |
4.8%* |
£187.33 |
£11,239.80 |
|
5.0% |
£188.20 |
£11,292.00 |
|
|
5.0% |
£188.20 |
£11,292.00 |
|
|
5.0% |
£188.20 |
£11,292.00 |
|
| Zopa | 5.0% | £188.20 | £11,292.00 |
| Clydesdale Bank Personal Loan | 5.0% | £188.20 | £11,292.00 |
| Yorkshire Bank Personal Loan | 5.0% | £188.20 | £11,292.00 |
*Current account customers only
Best for borrowing £15,000 over five years
|
Provider |
APR |
Monthly repayment |
Total amount repayable |
|
4.8% |
£280.99 |
£16,859.40 |
|
|
HSBC Personal Loan |
4.8%* |
£280.99 |
£16,859.40 |
|
5.0% |
£282.31 |
£16,938.60 |
|
|
5.0% |
£282.31 |
£16,938.60 |
|
|
5.0% |
£282.31 |
£16,938.60 |
|
| Zopa | 5.0% | £282.31 | £16,938.60 |
| Clydesdale Bank Personal Loan | 5.0% | £282.31 | £16,938.60 |
| Yorkshire Bank Personal Loan | 5.0% | £282.31 | £16,938.60 |
*Current account customers only
Tesco comes top
As you can see borrowing £7,500, £10,000 or £15,000 over 60 months is best done with Tesco if you are after the lowest rate around and aren’t prepared to become an HSBC current account customer.
The next best rate on offer is 5% which is available from a number of lenders.
However, if you can afford to borrow over a shorter period of three years instead of five, Tesco faces a bit more competition.
A loan of £10,000 or £15,000 over 36 months can be taken out with peer-to-peer lender Zopa for 4.8%. Zopa allows savers to lend their cash directly to borrowers. Because the platform cuts out the middle man in the form of banks, both sides tend to get better rates.
For a smaller loan of £7,500 over three years, Zopa and Sainsbury’s Bank are offering a rate of 4.9%, which isn’t far off Tesco’s offer.
Beware headline rates
Unfortunately not everyone that successfully applies for Tesco's leading personal loan deal will get it.
Lenders only have to grant 51% of successful applicants the headline rate, so that means the other 49% might be offered something higher. The rate you get will depend on your financial situation.
One way to check if you are likely to be eligible for the best rates on offer from a lender is to check your credit score.
Try CreditExpert which offers a free 30-day trial to lovemoney.com readers.
More on borrowing:
The best cashback credit cards
The best 0% purchase credit cards
The best money transfer credit cards
The best 0% balance transfer credit cards
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Comments
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[b]Beware headline rates Unfortunately not everyone that successfully applies for Tesco's leading personal loan deal will get it.[/b] This is what is known as a hook, and very few who apply will be lucky to get this low rate. Most people will be sold a higher rate loan. I remember the LloydsTSB loan letter that they sent me. When I made an enquiry, the APR suddenly shot up half a percent, and their explanation was that the market is variable and it is all down to the exact moment I apply for the loan. Ironically, when I completed their online form, it returned to the lower rate. We have to remember that banks have to abide by a strict code of conduct, which is to fleece us of every penny that they can. If they can sell it to us, they will, otherwise they will invent charges and fees, such as the, 'Hello Fee' for greeting us behind that bullet proof glass.
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31 December 2013