Sainsbury's Bank slashes personal loan rates and tops best buys

The personal loan market is heating up again with a new market-leading rate available, but only for a limited time.

Sainsbury’s Bank has cut the rate on its standard personal loan from 5.1% to 4.9%, making it the cheapest deal on the market for loans of between £7,500 and £15,000.

The reduced rate is only available for a limited time, from 30th August until Monday 23rd September.

Sainsbury's has also slashed other rates on both its standard and reward loans, which are also only available during this period.

Market-leading loan

The market-leading loan at 4.9% from Sainsbury’s Bank is for loans with a repayment period of between three and five years.

If you were to take out a loan of £10,000 with this loan over five years, for example, the monthly payments would be £187.77 and you’d pay back a total of £11,266.20.

It is the cheapest loan on the market from any standard lender and only matched by peer-to-peer lender Zopa. Although Nationwide also has a loan at the same rate it's only available for people who already have a current account.

The one catch with this loan is you’ll need a Nectar card to access it, but these are free and you only need to use it once to be eligible.

Our comparison tables give a fuller picture of the loan market but below I’ve listed the loans with the cheapest rates right now and how much each would cost for a loan of £10,000 paid back over five years.

*Available to existing Nationwide customers only

**Available to existing M&S Bank customers only

Other rate changes

Sainsbury's Bank is also reducing the rate on any standard loan from 4.9% to 4.8% which is taken out and paid back in under three years. The rate on loans taken out for more than five years will be reduced to 6.9% from 7.1%.

The Shopper Reward Loan has also become cheaper although these changes aren’t as competitive.  For a loan paid back in under three years the new rate is 5.1%, previously 5.4%, and for those paid back in three to five years the rate has dropped to 5.2%, from 5.5%.

As this one is a reward loan, customers also get an extra 5,000 Nectar points and bonus points for two years.

Personal loan competition

The pricing war between providers in the personal loan market has been ongoing since the start of this year.

The pattern so far has been that once a market-leading rate is announced, it's only a matter of days, or even hours, before another provider slashes its rates. Therefore, although the Sainsbury’s deal only lasts a month, it's worth keeping an eye on the market as rates on other loans could well be cut during this time.

Compare personal loan rates

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