Focus on: Derbyshire Building Society's 6% personal loan exclusive

Published:
14 March 2012
Topic:
News,Money,Loans,Product review

Derbyshire Building Society, which is part of Nationwide, has created a ripple through the personal loan market by launching a joint market leading deal with a representative APR of 6%.

The new offering - which is exclusive to MoneySupermarket - shares the top slot with Sainsbury's and M&S, which also offer personal loans with representative APRs of 6%.

But don't make your decision on rate alone as each personal loan is slightly different. Instead, do your homework first by taking a look at each deal in closer detail...

What's the deal?

Derbyshire Building Society is offering a joint market leading representative APR of 6% on loans of between £7,500 and £14,999. Repayment terms range between one and five years, although, clearly, the shorter time you borrow for the less interest you will pay.

If you borrow £10,000 at an APR of 6% over five years for example, you would pay back a total of £1,600 in interest. But, if you take the same borrowing over just one year, the total interest would only cost you £327.

As well as having a squeaky-clean credit record, you will need to be over 18 and a UK resident to qualify for Derbyshire's new personal loan.

What are the alternatives?

If you are only looking at the best rate, the Derbyshire is not alone in its market-leading slot. 

Sainsbury's personal loan also carries a representative APR of 6% on borrowing of between £7,500 and £15,000. However, for this rate to apply, repayment terms are only available between one and three years. If you want to take the loan over four or five years, the representative APR creeps up slightly to 6.1%.

You will also need to be a Nectar card holder to qualify for the Sainsbury's loan, though this isn't much of a hurdle. You can simply walk into any store, fill out a short form and pick up a card on the spot for free.

M&S is the other contender, also offering a representative APR of 6% for borrowing of between £7,500 and £15,000. And, like the Derbyshire deal, you can also choose a repayment term of up to five years.

However, this loan comes with the potentially major stumbling block that you must either be a homeowner or at least 30 years old to qualify.

Are there any downsides?

The only downsides that apply to the Derbyshire loan apply to any other; the representative APR is not necessarily the one you will qualify for. In fact, under the rules of the Consumer Credit Directive, the advertised representative APR only has to be offered to at least 51% of successful applicants. This means that up to 49% of people could be offered a much higher rate - if they are given the green light at all.

What's the verdict?

In light of the fact that Sainsbury's personal loan offering is for Nectar card holders who will need to pay off their loan off over a maximum of three years to get the best rate, and M&S reserves the same market-leading rate for either homeowners or customers aged 30 or over, there is little argument that Derbyshire has the best deal.

This is why, even though the representative APR of 6% is the same, the building society takes top slot in our best-buy tables. 

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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About This Author

Laura Howard

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Content Editor, Money and Lifestyle

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