Loan rates at lowest level in four years
Interest rates on personal loans have dropped to their lowest levels in four years giving some light relief to borrowers.
Marks & Spencer Money is the latest provider to lower its rates by 0.4% to 6% on a loan of £10,000 over a five-year period.
Since the beginning of 2012, seven lenders including Santander, Barclays and Tesco Bank have lowered their rates on personal loans helping customers looking to consolidate their debts.
The lowest loan rate available a year ago was 8.4% from Tesco Bank, two years ago it was 7.8% from yourpersonalloan.co.uk, three years ago it was 6.8% from Masterloan and four years ago it was 5.8% from Moneyback Bank.
Rachel Springall, spokesperson for Moneyfacts.co.uk, says: “It will be interesting to see whether other lenders follow suit over the coming weeks. Customers must shop around for the best deal as loan rates are continuing to fall in this competitive market."
Current lowest rates on personal loans (based on borrowing £10,000 over a five year term)
|POST OFFICE||7.4%||NATIONWIDE BUILDING SOCIETY||6.4%|
|SAINSBURY'S FINANCE||6.4%||MARKS AND SPENCER MONEY||6.0%|
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.