Average personal loan rates for medium-sized borrowing have plummeted to their lowest ever levels.
We’ve crunched the numbers and found that the average APR (annual percentage rate) on loans of £5,000 over five years has fallen from 7.63% in January to 6.05% today.
It’s a similar story for those borrowing £7,500. The average APR has dropped from 5.01% in January to 4.19% in August – representing a saving of £168 over five years.
What does this mean for you?
With Sainsbury’s, you must repay the loan in one to three years; with Hitachi it can be repaid over two to five years.
Be aware you’ll need to be a Nectar card holder to qualify for the Sainsbury’s loan – if you’re not, the rate rises slightly to 4.5% APR representative.
For those looking to borrow between £7,500 and £15,000, the rates are even better.
If you’re not a Nectar card holder, the rate rises to 3.6% APR representative.
over the past month, rates on larger-sized loans have become just as competitive as those for medium-sized loans.
Great rates for larger borrowing
Should you need to borrow even more – perhaps to fund important home improvements – the good news is you don’t have to miss out on low rates.
In fact, over the past month, rates on larger-sized loans have become just as competitive as those for medium-sized loans.
Sainsbury’s, for example, has lowered its rate on borrowing of between £15,001 and £19,999 to 3.5% APR representative, repaid over two to three years. (The rate rises to 3.6% APR representative if you don’t have a Nectar card.)
Similarly, Cahoot (whose loans are provided by Santander) is also offering 3.6% APR representative on borrowing of between £15,001 and £20,000 over one to five years.
Kevin Mountford, head of banking at MoneySuperMarket, said: “It’s especially interesting to see such drastic rate reductions in the larger loans bracket where rates now mirror those on offer in the medium loan size category.
“Banks are willing and able to lend money at the moment and the reduction in these larger loan rates for those borrowing between £15,001 and £19,999 is a good indicator that lenders are looking to entice those looking for a large level of borrowing, who in the past may have opted to remortgage for those amounts due to the lower rates on offer.”
Act before rates rise
If you are thinking about applying for a personal loan, you may want to act quickly as there is no guarantee that rates will remain this low – especially with recent speculation that the Bank of England base rate could rise at the turn of the year.
But be warned that the very best rates are reserved for those with an excellent credit score. You can apply for a copy of yours here.
Only 51% of successful applicants need to qualify for the rates in order for providers to advertise them – which means a lot of people are turned down.
If you’re worried you may not be accepted for a top personal loan rate, use the MoneySuperMarket Smart Search tool which will tell you how likely you are to be accepted for a loan without leaving a mark on your credit file.
You can read more about how SmartSearch works here.
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.