There's a definite price war going on in the personal loan market at the moment. Providers are slashing their rates to get your business with several reducing rates in the last week alone, particularly for mid-tier loan amounts, which means if you're looking to make that big purchase or consolidate existing debts then now's a great time to go about it.
It's even better news considering that the Funding for Lending Scheme (FLS), which gives lenders access to cheaper finance on the condition that they lend the money on at lower rates, is being withdrawn from the residential market this month.
The FLS helped pushed down fixed loan rates from an average of 7.5% pre-summer 2012 (when the scheme was launched) to just 4.6% today, meaning borrowers have access to the best rates they're likely to get for a very long time.
The removal of the FLS for residential borrowing means that, over time, personal loan rates could start to rise again. There's likely to be a lag, however, and with demand for loans increasing at this time of year it means competition should continue to intensify to keep rates low.
Currently, Moneyfacts data reveals that the best buy for a personal loan* of between £7,500 and £15,000 comes from Sainsbury's, with a representative APR of just 4.7%. This is closely followed by Clydesdale and Yorkshire banks (again offering 4.7% APR), with M&S Bank just slightly behind with a representative APR of 4.8%.
In fact, all providers in the top five offer rates under 5% for this level of borrowing, and it'll be interesting to see who enters the price war next.
*Rates are representative and depend on individual credit score, term and loan amount.
If you're in the market for a new loan make sure to act quickly – some rate reductions are only offered for a limited time – and use our handy loan calculator to find the best rate for your needs.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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