Focus on: Loan rates fall to a near five-year low
Amidst all the gloomy financial news this week, there were at least some glad tidings for anyone looking to take out a loan, after rates reached their lowest level for nearly five years.
Sainsbury's Bank has just slashed its personal loan rate down to 5.90% for those wanting to borrow between £7,500 and £15,000 - the first time that rates have fallen below 6.00% since September 2007.
Here we take a look at the deal in more detail, and what you need to know before applying...
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Sainsbury's Bank is offering a representative annual percentage rate (APR) of just 5.90% on loans of £7,500 up to £15,000 which are repaid between one and three years.
If you want to pay off the loan over a longer period, between four and five years, the bank is offering a marginally higher rate of 6.10%.
A lower rate is offered to those who can clear their debt more quickly because they are considered lower risk than those who need more time.
You must be a Nectar card holder to apply for these rates, but you can pick up a card free of charge in your nearest Sainsbury's so that does not present a hurdle.
You must also be aged 18 or over to apply, not have been declined for credit in the last month, or have a history of bad credit arrears, County Court Judgements (CCJs), defaults or previous bankruptcy.
Sainsbury's is not alone in reducing rates on personal loans. Yorkshire and Clydesdale banks have also reduced the rate on borrowing between £7,500 and £14,999 from a representative APR 6.10% down to 6.0%.
Several other lenders are also currently offering rates at 6.0% APR, such as Derbyshire Building Society, which again applies to borrowing of £7,500 up to £14,999.
Borrowers can choose how long they want to repay their debt, with repayment terms ranging from 12 to 60 months.
As with the Sainsbury's loan, you must have an excellent credit rating to apply for the Derbyshire deal, which is only available through MoneySupermarket.
More specifically, you must not have missed three payments in the last 12 months, not have CCJ against you, been made bankrupt or be in an Individual Voluntary Arrangement (IVA).
Again, there is a minimum age limit of 18 to apply for the Derbyshire deal. Marks & Spencer similarly offers a representative rate of 6.0% on loans between £7,500 and £14,999 and again repayment terms range from 12 to 60 months.
If you do need to take out a loan, then now is a great time to take advantage of the low rates on offer and Sainsbury's rate for loans between £7,500 and £15,000 currently can't be bettered.
However, loan rates change frequently, so don't hang around if you are interested as this rate may not be around for long.
The best loan deals will only be offered to those with excellent credit ratings, so you are unlikely to qualify for the
Sainsbury's loan if you have ever defaulted on any payments.
Remember that getting rejected for a loan application can have a negative effect on your credit rating, which in turn can hamper your chances of getting credit in the future.
If you want to limit the chances of your application being rejected, you can use MoneySupermarket's loans smart search to get an estimate of how likely you are to be accepted for a loan.
You can also limit the chances of being rejected by checking your credit profile for any errors.
You can apply for a copy of your credit report and compare prices at MoneySupermarket's credit monitoring channel.
Remember that the smaller the amount you borrow, the higher the APR is likely to be, so it may actually be more cost-effective to borrow more.
For example, for loans between £5,000 up to £7,500 Sainsbury's charges a representative APR of 7.60% if you can repay it in between one and three years.
So if you wanted to borrow £7,000, you'd be better off borrowing £7,500 instead to benefit from the lower loan rate of 5.90%.