Focus on: Sainsbury’s offer lowest EVER 3.8% loan

Sainsbury’s Bank has slashed its personal loan rates yet again and is now offering the lowest EVER loan rate from a bank or building society.

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If you have a Nectar card – the supermarket’s loyalty card –you can borrow between £7,500 and £15,000 and pay interest at just 3.8%. That’s the market leading rate on loans of this size.

There’s lots of small print, though, so make sure you understand exactly what’s on offer before signing-up.

What’s the deal?

Sainsbury’s Bank is offering a headline representative annual percentage rate (APR) of just 3.8% on loans between £7,500 and £15,000. Previously the bank charged 4.0% APR.

To get this rate you must pay back what you owe between one and three years.

You’ll only get the 3.8% rate if you have a Nectar loyalty card which has been swiped in store or used online in the last six months.

If you don’t have a Nectar card, then you can still get a Sainsbury’s Bank loan, but you’ll pay a slightly higher rate of 3.9% if you’re borrowing the money between one and three years.

The rates if you choose a longer repayment term are the same whether you have a Nectar card or not.

If, for example, you opt for a longer repayment period from three to five years, the rate is 3.9% APR, down from 4.1% previously.

If you want to borrow the same amount over a term that’s longer than five years, then the rate is 5.9%, down from the previous rate of 6.1%.

There’s another loan option available too, known as the Reward loan, which is designed with regular Sainsbury’s shoppers in mind. It works like this:

  • you opt to pay slightly higher loan rates, but in return you’ll get 5,000 bonus Nectar points when you sign up
  • you’ll also get double Nectar points on your shopping for two years
  • you’ll pay a representative rate of 4.2% APR for loans up to five years, or 4.1% for loans up to three years.

There are no loan set-up fees for any of these loans, and you’ll be offered the option of a two-month repayment holiday at the start of the loan term.

“Sainsbury’s cheap loan rates for borrowing between £7,500 and £15,000 are a great deal if you need to borrow a large lump sum”

Who’s it good for?

Sainsbury’s cheap loan rates for borrowing between £7,500 and £15,000 are a great deal if you need to borrow a large lump sum, perhaps to buy a new car or to pay for home improvements.

The two-month repayment holiday means it’s also a good option for anyone who needs a loan now, but perhaps can’t afford to start paying it off straight away.

If you tend to do all your supermarket shopping at Sainsbury’s, then you might want to go for the Reward option, but remember you will pay back more overall.

Here’s an example:

  • If you took out a £10,000 Reward loan over five years at 4.2%, you’d pay £184.71 a month, with a total amount repayable of £11,082.60
  • If you took out a £10,000 standard loan over five years at 3.9%, you’d pay £183.41 a month, with a total amount repayable of £11,004.60 – that’s £78 less than the Reward loan.

You should therefore only consider the Reward option if you are certain the value of the Nectar points you earn will more than offset the higher interest you’ll pay.

Can I repay the loan early?

Yes, you can, but lenders can charge up to 58 days’ interest if you pay off your loan, in full, ahead of schedule.

If you’re already near the end of your loan, it might not be worth repaying before the end of the term given the extra interest you’ll pay.

If you do want to pay off your loan early, perhaps because you got a work bonus and so have some extra funds, you’ll need to ask Sainsbury’s for an early settlement quote.

This will tell you how much you still owe, any reduction in the total amount of interest, any early repayment charges, the early settlement figure and when you need to pay this by.

Any catches?

You’ll only qualify for the bank’s lowest 3.8% APR if you have an impeccable credit score, and you can afford to pay off what you owe within three years.

That’s a pretty short period to repay between £7,500 and £15,000, so you must be sure you can afford the monthly repayments.

What’s the verdict?

Sainsbury’s loan rates if you’re borrowing between £7,500 and £15,000 are the best available from any bank or building society.

The Sainsbury’s deal is especially attractive because of the repayment holiday and the fact you have the Reward option too if you want to boost your Nectar points.

Top tip!

Headline-grabbing low loan rates might look tempting, but there’s no guarantee you’ll get the advertised rate.

The rate shown is the ‘representative’ rate and only has to be offered to at least 51% of customers.

If you’re among the other 49%, you might be offered an entirely different higher rate if your credit score isn’t up to scratch.

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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