Personal loan rates fall in time for Christmas | moneyfacts.co.uk
MONEYFACTS ARCHIVE. This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Derin Clark

Derin Clark

Online Reporter
Published: 10/12/2019

Christmas can be a financially stressful time of year, so consumers looking to consolidate their debts during the festive period or into the new year will be pleased that the average personal loan rate has fallen.

Research due to be published in the Moneyfacts UK Credit Card Trends Treasury Report reveals that the average rate in the £5,000 over three years tier has fallen by 0.2% since November to stand at 7.0% today, while the £10,000 over five years loan tier decreased by 0.2%, offering 4.5% today. As well as this, the average rate at the loan tier of £7,500 over five years has also fallen, albeit by a more modest 0.1% over the month to stand at 4.6% today. 

Commenting on the fall in loan rates, Rachel Springall, finance expert at Moneyfacts, said: “It’s encouraging to see that the unsecured personal loans market is still buoyant, with rates falling over the past quarter. This improvement to the loans market could be encouraging for borrowers considering consolidating their debts either now or in the new year.”

Unsecured personal loan market analysis 

Average loan rates (by tier) Dec 2017 Dec 2018 Nov 2019 Dec 2019
£5,000 over three years 7.2% 6.8% 7.2% 7.0%
£7,500 over five years 4.7% 4.8% 4.7% 4.6%
£10,000 over five years 4.6% 4.7% 4.7% 4.5%

Source: Moneyfacts Treasury Reports

The best loan rates available

Those looking to take out a personal loan can benefit from highly competitive rates currently available in the personal loan charts. Topping the £5,000 over three years tier today on a loan that is not peer-to-peer is Admiral offering 3.4% APR, while cahoot tops both the £7,500 over five years tier and the £10,000 over five years tiers offering 2.8% APR.

“cahoot re-entered the personal loans market during November, and it currently holds a market-leading position with a rate of 2.8%, based on a loan of £7,500 or even £10,000 over five years,” Springall added. “There were a few reductions over the past three months too – TSB cut its existing customer loans by 2.0% on its £5,000 to £7,499 tier during November and Monzo Bank reduced rates by 0.9% on loans up to £7,499 a month prior to this.”

Consumers wanting to borrow money through a personal loan are being warned that the competitive rates might not last into 2020, as economic uncertainty could see rates rise. Springall continued: “In terms of how long this competition will last it is difficult to predict, as lenders may feel some pressure to change their loan pricing in 2020. The risk of consumers defaulting on loans may be a concern during a period of economic uncertainty, so loan rates could rise or lenders could even pull out of this market entirely.

“While the lowest loan rate is less than 3%, it is important borrowers are aware that as only 51% of successful applicants need to be offered the advertised APR of an unsecured personal loan, these are not guaranteed. To assist borrowers, it would be wise for them to check their credit report before applying and check it for any errors.

“Borrowers looking to take advantage of the lowest rates may only be able to apply online or by phone. It is unlikely that they will find rates any lower with their existing high street bank, so it’s important to consider alternative brands for an unsecured personal loan.”

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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