The latest lender to slash its rates is Derbyshire Building Society which is now offering an APR (annual percentage rate) of 5.1% on loans of between £7,500 and £15,000.

The move has propelled the building society to joint top of the tables meaning it is now neck-and-neck with Sainsbury’s and Clydesdale banks. We take a look at the deal in closer detail.

What’s the deal?

Derbyshire Building Society is offering customers looking to borrow between £7,500 and £15,000 a joint market leading APR of 5.1% (representative).

This rate – the lowest in history – applies to loans that are taken out over a period of one to five years. Your repayments will never change as the rate will be fixed for the term of the loan, allowing you to budget accordingly.

The application process is simple and straightforward – and when you apply online, in most cases, you will receive an instant decision. A further advantage is that there are no hidden fees so you won’t be charged anything for setting up your loan.

Any catches?

To be accepted for a loan with a market leading rate, you’ll need to have a sparkling credit rating. If you are unsure of where the land lies with yours, it is well worth obtaining a copy of your report before applying.

This is because if you do apply for a loan and are rejected, it can further damage your score, making it difficult for you to be accepted for credit in the future.

Therefore, find out if there are any blemishes on your file and, if there are, take steps to start rebuilding it.You can apply for a copy of your credit report online from credit reference agencies such as Experian and Equifax. Melanie Wright’s article will give you tips on how to start repairing your score.

Another requirement of Derbyshire’s loan is that you are aged at least 18, will be a UK resident for the full term of the loan and will have a minimum combined income of £700 per month.

It’s also worth remembering, as is the case with any loan, the fantastic rate advertised is not necessarily the fantastic rate you’ll get. The representative APR only needs to be offered to 51% of successful applicants so be aware that you could actually be offered a higher rate when you apply.

Any alternatives?

Borrowers are in a great position at the moment. To borrow between £7,500 and £15,000, along with Derbyshire, you can get the same rate of 5.1% from Sainsbury’s and Clydesdale banks.

However, to apply for the Sainsbury’s loan you’ll need to be a Nectar card holder and it can only be taken out over three years – although this shorter term may suit you.

What’s the verdict?

The Derbyshire loan is the latest in a long line of lenders to slash its rates – however, don’t be complacent and wait around. These rates won’t last for ever so, if you need to borrow a medium-sized loan, make sure you don’t let it pass you by. However, make sure that you do your homework and make sure that you are going to be able to make the repayments.

A loan is there to support your spending and, as such, should be used to your advantage as a financial tool.

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.