Hitachi cuts rate on smaller loans to 5.6%

The personal loan rate war is heating up as yet another lender slashes its prices, this time for smaller loans.

Hitachi has dropped the rate on its small personal loans by 0.3%.

Now the lender is offering a rate of 5.6% when you borrow between £5,000 and £7,499.

However, you will need to be willing to spread your repayments over three to five years in order to qualify. Shorter terms will attract a higher 5.9% rate.  

How Hitachi compares

Here are the best rates available for borrowing £5,000 over five years.

And here are the top rates available for borrowing £7,499 over five years.

*Existing customers only

If you only want to borrow £5,000 over five years the best deal comes from peer-to-peer lender Zopa followed by Hitachi.

However, at the other end of the spectrum, you're best off borrowing £7,499 over five years with HSBC or First Direct, though these rates are reserved for existing customers.

If you’re not an existing customer Zopa and Hitachi again offer the two best deals on the market.

Borrowing more could save you money

The best buy rates above are available on loans up to £7,499.

But if you borrow just £1 more, which pushes your borrowing into medium-sized personal loans, you would be better off as rates are at historic lows in this sphere.

Borrowing £7,499 over five years will get you a rate of 4.8% and cost you £8,428.71 overall with HSBC. But borrowing £7,500 over five years can get you a rate of just 4.4% with Zopa, costing you £8,361 overall.

In effect borrowing £1 more can save you £63.71.

And for those that can’t access either the HSBC or First Direct rate on a £7,499 loan the saving is even more pronounced.

Borrowing £7,499 over five years with Zopa will get you a rate of 5.5% with a total cost of £8,575.20, but borrowing £7,500 will get you a rate of 4.4% with the lender and cost just £8,361, saving you £214.20.

You can use our comparison centre to see how different sized loans taken out over different terms can vary in price and pick the best deal for you.

But here are the cheapest loans available if you choose to borrow £7,500 over five years.

For more read The cheapest personal loans.

Rate war

There’s never been a better time to get a personal loan as lenders are battling to offer the best rates in order to attract borrowers.

Hitachi joins a raft of lenders including Zopa and Sainsbury’s that have battling in a race to the bottom over the past few weeks across small and medium-sized loans.

However, you should bear in mind that the advertised rates only have to be offered to 51% of successful applicants. So even if you are accepted you may be offered a worse rate.  

The best rates will go to those with squeaky clean credit records, so make sure yours is up to date. You can get a free 30-day trial with Experian thanks to lovemoney.com.

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American Express launches exclusive 0% purchase and cashback card