Personal loan rates dip below 3% for the first time

It seems that it’s not just credit card companies fighting for New Year consumer borrowing business, loan rates are being slashed too with Sainsbury’s Bank today offering a 2.9% APR rate on loans between £7,500 and £19,999 and an even lower 2.8% APR for Nectar card customers.

This is the first time we’ve seen rates dip below 3% for personal loans in the UK – driven down as lenders strive to be top of the best buys in an effort to win new custom.

The tables below highlight just how far loan rates have fallen in the last 5 years.

Back in 2011 a £10,000 was being charged at a market average rate of 7.9% APR with monthly repayments of £202.29 over 5 years.

The new 2.9% APR deal from Sainsbury’s Bank means monthly repayments are £179.07 on a £10,000 loan over 5 years – a total saving of £1393 in interest charges when compared with December 2011.

This is a great opportunity for consumers to lock in to a record low interest rate if they have a good credit record.

Whether it’s a New Year resolution to sort out your finances or perhaps a new car or home improvements, this is an excellent chance to keep finance costs to a minimum.

It will be interesting to see if this move provokes a reaction from rival lenders, however with inflation predicted to soar in 2017 we may see a bank base rate increase which could spell the end of these ultra-low rate personal loan deals.

Personal loan £10,000 over a term of 60 months (Best Buy rate)
Date Best buy APR Best buy monthly repayment Best buy total payable over 60 months
December 2011 6.20% £193.47 £11,608.20
December 2012 5.40% £189.96 £11,397.60
December 2013 5.00% £188.20 £11,292.00
December 2014 3.90% £183.41 £11,004.60
December 2015 3.50% £181.66 £10,899.60
December 2016 2.90% £179.07 £10,744.20
Research by Moneycomms 14.12.2016

 

Personal loan £10,000 over a term of 60 months (Average rate)
Date Average APR Average monthly repayment Average total payable over 60 months
December 2011 7.90% £202.29 £12,137.40
December 2012 7.30% £199.43 £11,965.80
December 2013 6.60% £196.13 £11,767.80
December 2014 5.40% £190.55 £11,433.00
December 2015 4.90% £188.25 £11,295.00
December 2016 4.00% £184.17 £11,050.20
Research by Moneycomms 14.12.2016

 

ENDS

1 Trackbacks & Pingbacks

  1. The UK’s first personal loan with a late lower than 3% – How will it impact the market? – Building a fairer credit market

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