The surprising things we’re now using cheap loans to buy

What do beach huts, pianos and cosmetic surgery have in common? The answer, according to Sainsbury’s, is that they’re all reasons people have taken out a personal loan in the last 12 months.



Research by the supermarket bank found that while car-buying, home improvements and consolidating existing debt are still the main drivers for taking a personal loan, more ‘leftfield’ motivations included building a steam engine, buying a vintage bus and financing hair treatments.

What is a personal loan?

A personal loan enables you to borrow cash (typically between £1,000 and £25,000) without securing it against your home or any other asset. This is why they are also known as unsecured loans.

You can usually opt to repay whatever you borrow over terms spanning 12 months to 5 years. The interest rate – and monthly repayment – is fixed over whatever term you choose.

APRs (annual percentage rates) on personal loans have been steadily falling over the past few years and the best deals now charge less than 4%. But these lowest rates only apply only to mid-sized loans of between £7,500 and £15,000. Borrow either side of these thresholds and you’ll pay much more in interest.

Best deals

Sainsbury’s – which won Best Unsecured Loan Provider at our 2015 Supers awards – is currently offering a competitive 3.7% (representative) on borrowing between these amounts. But if you’ve got a Nectar card (and don’t need longer than a three-year repayment term) the rate is reduced to 3.6%.

Sainsbury’s is unusual in that it extends its personal loan offerings right up to £35,000 – we covered the news story at the time. But the bank’s rates for bigger loans start at around 7% APR.

Elsewhere, M&S Bank has also slashed rates on its personal loans down to 3.6% (representative), again, for borrowing between £7,500 and £15,000. If you want to borrow over a four or five-year term, this is the lowest rate on record which is accessible to all applicants. Existing current account customers with Nationwide and First Direct will have access to the same 3.6% rate over all repayment durations.

You’ll need to have a cracking credit score to be accepted for any loan this cheap. If you are not convinced of yours, use our Eligibility Checker tool when applying, which will give you an indication of whether you’ll be accepted and won’t leave a footprint on your credit file.

Loan alternatives

Some personal loans maybe the cheapest in history but, for smaller sums when rates shoot up to mid-double figures, a 0% interest credit card could be a better bet.

If you want cash, MBNA’sPlatinum Credit Card will transfer it into your account interest-free for the first 24 months. The related money transfer fee has also been reduced to just 1.94% if you use MoneySuperMarket. 

If you can pop the cost straight on a credit card, Santander’s 123 card won’t charge a transfer fee and is interest-free for 23 months. There is an annual fee of £24, though this is waived for the first year if you have a 123 current account.

While the first part of your borrowing may be interest-free with a credit card, APRs that kick in when the 0% term expires are high (18.9% and 15.5% representative in these two examples) so ensure you clear your balance in time.

This is something worth considering if opting for piano lessons, which can take up to four years to get beyond Chopsticks.

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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