Sainsbury’s Bank cuts personal loan rate to 3.8%
Supermarket bank slashes rate to new record low for high street.
Sainsbury’s Bank has cut the rates on its medium-sized personal loans, making it the cheapest high street lender.
The supermarket has knocked 0.2% off the cost of borrowing between £7,500 and £15,000 on its Standard and Shopper Reward deals.
Sainsbury’s Standard Loan offers the supermarket’s best rate and comes with a price promise to undercut rivals. With this loan, Nectar cardholders get a preferential rate on shorter borrowing terms compared to non-Nectar cardholders.
The Shopper Reward loan is available to Nectar cardholders only. It doesn’t offer Sainsbury's best rate but does provide 5,000 bonus Nectar points and enables borrowers to earn double Nectar points for two years.
The new rates
The Standard Loan now offers a rock bottom rate of 3.8% for those with a Nectar card wanting to borrow between £7,500 and £15,000 over 12 to 36 months, while those without a Nectar card get a rate of 3.9%.
However, both Nectar cardholders and non-Nectar cardholders that would prefer to repay over 37 to 60 months can now get a rate of 3.9%.
Alternatively those attracted to the offer of a Nectar boost can go for a rate of 4.1% over 12 to 36 months, or 4.2% when borrowing over 37 to 60 months with the Shopper Reward loan.
How Sainsbury’s compares
Here’s how Sainsbury’s compares when looking to borrow £7,500 over three years.
|
Personal loan |
Representative APR |
Monthly repayment |
Total amount repayable |
|
3.7% |
£220.24 |
£7,928.64 |
|
|
3.8% |
£220.55 |
£7,939.80 |
|
|
3.9% |
£220.87 |
£7,951.32 |
|
|
3.9% |
£220.87 |
£7,951.32 |
|
|
3.9% |
£220.87 |
£7,951.32 |
|
|
HSBC Personal Loan* |
3.9% |
£220.87 |
£7,951.32 |
|
4% |
£221.19 |
£7,962.84 |
|
|
First Direct Personal Loan* |
4% |
£221.19 |
£7,962.84 |
*Only available to existing current account holders
And here’s how Sainsbury’s stacks up when borrowing £7,500 over five years.
|
Personal loan |
Representative APR |
Monthly repayment |
Total amount repayable |
|
3.9% |
£137.56 |
£8,253.60 |
|
|
3.9% |
£137.56 |
£8,253.60 |
|
|
3.9% |
£137.56 |
£8,253.60 |
|
|
3.9% |
£137.56 |
£8,253.60 |
|
|
HSBC Personal Loan* |
3.9% |
£137.56 |
£8,253.60 |
|
3.9% |
£137.57 |
£8,254.20 |
|
|
4% |
£137.88 |
£8,272.80 |
|
|
First Direct Personal Loan* |
4% |
£137.88 |
£8,272.80 |
*Only available to existing current account holders
At the moment peer-to-peer lender Zopa is offering a rate of 3.7% when it comes to borrowing between £7,500 and £15,000 over two to three years.
So Sainsbury’s 3.8% rate is second best unless you choose to borrow over one year.
If you want to borrow for longer than three years Sainsbury’s is joint top with other lenders that offer the same 3.9% rate.
However, Sainsbury’s could still beat Zopa and its rivals with its price promise.
This guarantees to undercut your best offer on like-for-like loan by 0.1%. You need to have applied for the Standard Loan and been accepted, but not signed the loan agreement. You also need to provide proof of a better offer within 28 days of receiving your Sainsbury's deal.
So if Zopa was to offer you its headline rate of 3.7%, you may be able to get an even better offer of 3.6% from Sainsbury's.
However, you should bear in mind that chasing the best rate in this way involves applying for two loans, so you need a very good credit rating.
More on banking and borrowing:
The best current account incentives and freebies
Wonga to write off payday loan debt for 330,000 borrowers
Yorkshire BS hit with big fine for poor treatment of struggling borrowers
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