Sainsbury's banking arm has once again leapfrogged its rivals by offering the cheapest personal loans.
Sainsbury’s Bank has cut rates on its personal loans again.
As a result, it's now among the market leaders for both small- and medium-sized loans.
Let's take a look at what's changed and how the Sainsbury's loans compare.
Small-size loans
Sainsbury's has cut its lowest interest rate on loans of between £5,000 to £7,499 to 5.3%. That's providing you can pay it back in up to three years and have a Nectar card that’s been used at least once in the last six months. If you don't have or don't want a Nectar card, you're looking at a rate of 5.4%.
Here's how this new rate compares to the rest of the best buys for borrowing a small loan over up to three years.
|
Loan |
Representative APR |
|
5.3% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
And here's how the table looks for small loans repaid over three to five years. In this case, there's no difference in the Sainsbury's Bank rate if you have a Nectar card or not.
|
Loan |
Representative APR |
|
5.4% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
|
|
5.4% |
Medium-size loans
Meanwhile, Sainsbury's best rate on offer for borrowing between £7,500 and £14,999 is now just 3.9%, moving it to joint top in the best buy table for that price bracket.
To get that 3.9% rate, as well as an active Nectar card, you will need an excellent credit rating and be able to afford to pay your loan back in three years. If you have all of those, it will probably be the cheapest rate for you.
[SPOTLIGHT]That’s because HSBC's loan at 3.9% is only available to its current account customers.
If you need longer than three years and you don't have and don't want to get a Nectar card, you can still get a great rate of 4%.
These rate reductions are part of another Sainsbury's limited-time 'loan sale', so you only have until 3pm on 22nd July to get hold of a loan at these prices.
Let’s take a look at how these rate changes have altered the best buy tables, starting with rates if you want to repay over up to three years.
|
Loan |
Representative APR |
|
3.9% |
|
|
HSBC Existing Customer Personal Loan** |
3.9% |
|
4% |
|
|
4.1% |
|
|
4.1% |
|
|
4.1% |
|
|
4.1% |
*Available to Nectar card holders who've used it in the past six months only
**Available to current account customers only
***Available to existing bank customers only
And here's how the table looks for loans taken out between three and five years.
|
Loan |
Representative APR |
|
HSBC Existing Customer Personal Loan* |
3.9% |
|
4% |
|
|
4% |
|
|
4.1% |
|
|
4.1% |
|
|
4.1% |
|
|
4.1% |
*Available to current account customers only
**Available to existing bank customers only
More Nectar rewards for higher rates
If you're a regular Nectar point collector, you might be tempted by the Shopper Reward loans, which offer 5,000 bonus Nectar points plus double Nectar points on your spending for two years.
However, these loans have higher interest rates, ranging from 5.7%-5.8% on the small loans to 4.2%-4.3% for the medium-sized ones. That means a £10,000 loan repaid over five years will cost you £79 more. Work out how much the extra Nectar points would actually be worth to you before you opt for one of these loans.
Sainsbury's Price Promise
Sainsbury's also offers a Price Promise on its Standard Shopper loans. If you’re offered a like-for-like loan from another provider, Sainsbury’s pledges to beat it by 0.1%.
Note that this only applies to loans available to everyone. So the HSBC loan, for example, isn't eligible, as it's only available to the bank's current account customers.
To qualify you need to have applied successfully for the Sainsbury’s Standard Shopper loan, but not signed the loan agreement. You’ll also need to provide proof of a better offer within 28 days of receiving the Sainsbury’s offer.
Just be aware that applying for two large loans within a short space of time doesn’t look too good on your credit record.
I’ve been offered a higher rate!
Unfortunately the rates we’ve highlighted here won’t be offered to everyone, even if your application is approved.
That’s because lenders only have to offer the Representative APR to 51% of successful applicants. So if your credit record is anything less than spotless, don’t be surprised if you are offered a higher rate. Read How to repair your credit rating for tips on how to improve yours.
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