There is a new best-buy personal loan out today for non-homeowners.
Sainsbury’s Finance has announced a cut in its rate from 8.1% to 7.9% for loans between £5,000 and £15,000, making it the cheapest around. The previous best rate for those who don’t own their own place was 8.8%.
To qualify, you must have a Nectar card, which is Sainsbury’s loyalty card, and apply online. On a £5,000 loan at 7.9% over five years, you’ll pay £1,068 in interest.
The lowest-rate personal loan on the market is from Yourpersonalloan.co.uk, part of the Co-op, at 7.8%. But it is only available to homeowners borrowing between £5,000 and £25,000. On a £5,000 loan at 7.8% over five years, you’ll pay £1,054 in interest.
Rates are more expensive for loans below £5,000. Despite Sainsbury's cut, loan rates are still at historically high levels, which is even more noticeable given the current Bank of England base rate, at 0.5%, is at its lowest-ever level.
The average £5,000 loan rate, according to data analyst firm Moneyfacts, is 12.2%, up from 8.6% in June 2007. Then, interest rates stood at 5.5%, while the best buy personal loan was 6% from Bank of Scotland.