Focus on: Pay 4.9% for 5 years with Nationwide

If you're in the market for a personal loan in the region of £7,500 - £15,000, this is an ideal time. Loan rates are continuing to fall, and Nationwide has become the latest provider to cut its rates.

The building society is now offering a representative annual percentage rate (APR) of 4.9% to customers looking to repay their debt over five years. However, the deal is only available to Nationwide current account holders.

Let’s have a closer look…

What's the deal?

Nationwide is offering an annualised percentage rate (APR) of 4.9% on loans between £7,500 and £14,999. This is down from the previous 5.9%.

The rate is only available to Nationwide current account holders and applies to loans that are taken out over a period of one to five years. (Note that on the MoneySuperMarket tables, the Nationwide loan is listed at 6.2% as this is the rate open to everyone.)

The 4.9% deal is now joint market leader over the one to five year timeframe with peer-to-peer lender Zopa.

However, Zopa also offers a slightly cheaper rate of 4.8% on the same loan size (£7,500 to £15,000) for those looking to borrow over a shorter period of one to three years.  

You can apply for the Nationwide loan in branch, online or by telephone until September 26. 

Who's it good for?

The deal from Nationwide is a good option for those looking for a low-cost, unsecured, medium-sized loan to fund, say, home improvements or to buy a new car.

And, given that many of the best loan rates are only available on borrowing up to three years, Nationwide's offering could also be a good choice for those who need a little longer to repay their debt.

Any catches?

The main catch with the Nationwide personal loan is that you'll only qualify for the 4.9% APR if you have a Nationwide FlexAccountFlexDirect or FlexPlus current account.

And even if you do, as with any other bank or building society, the rate you see advertised is only ‘representative’ which, legally, means it only needs to be offered to 51% of successful applicants. So, depending on your credit score, you might have to pay a higher rate.

In addition, the 4.9% rate is only valid on loan amounts between £7,500 and £15,000 – should you want to borrow more or less than this, it'll be more expensive. Visit the MoneySuperMarket personal loan channel to compare deals.

What's the verdict?

If you're an existing Nationwide current account holder and you're looking for a medium-sized loan, the Nationwide personal loan rate of 4.9% is a competitive offering.

It can, however, be beaten by Zopa's rate of 4.8%, which is also available on loans between £7,500 and £15,000 - but if you apply for this loan, you'll need to be able to repay it within three years, rather than five.

Bear in mind too that Zopa is a peer-to-peer lender, which means the money will be lent to you from a number of customers through the Zopa website. You can read more about this in my article.

If you'd prefer not to opt for Zopa and you're not a Nationwide current account customer, there are a number of competitive alternatives and you won't have to miss out by much. Sainsbury's, for example, offers an APR of 4.9% on loans between £7,500 and £15,000 over one to three years, while Derbyshire Building Society offers an APR of 5.0% on loans between £7,500 and £15,000 for up to five years.

Top tip!

If you need to borrow a smaller sum of money, you could consider applying for a 0% purchase credit card instead. The Tesco Clubcard credit card, for example, allows you to avoid paying any interest at all on your spending for 18 months. However, you will need to clear your balance before the 0% window ends otherwise you'll pay a representative APR of 16.9% (variable).

Be aware that you'll need an excellent credit score to qualify so it's worth checking your credit rating first through our credit monitoring channel. You can read more about 0% purchase cards in my article.

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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