TSB reduces the rate on its personal loan

TSB has reduced the interest rate on its unsecured personal loan and is now offering borrowers 2.9% APR on loans between £7,500 to £25,000.

The high street bank previously charged 3.2% APR and its rate reduction sees it offering one of the most competitive rates in the personal loans chart. The new rate is available to both existing and new customers and can be applied for online, in branch or by phone. It includes a number of features such as payment flexibility and payment holidays. Borrowers looking for a loan between £20,001 and £25,000 over terms of 61 months to seven years should be aware that TSB charges a higher APR.

Commenting on the rate reduction, Graham Dodds, head of loans at TSB, said: "At this time of year, many people will be re-organising their finances, thinking of buying a new car, planning their summer holiday or simply consolidating their outstanding debts. Whatever the reason, the new TSB market-leading rate of 2.9% could be the perfect solution as it also allows customers the flexibility to make overpayments and the opportunity to take payment holidays should they need to do so.”

The lowest rate currently available in the personal loan chart for those looking to borrow £12,500 over 24 months is 2.8% APR from cahoot. This loan is available to new and existing customers and can only be applied for online.

Along with TSB, there are eight providers that also offer 2.9% APR on a personal loan for those looking to borrow £12,500 over 24 months. Clydesdale Bank, John Lewis Financial Services, M&S Bank, Sainsbury’s Bank, Tesco Bank, Yorkshire Bank and Zopa all offer loans at 2.9% APR which are available to existing and new customers. Nationwide Building Society also offers 2.9% APR, but this loan is only available to existing customers.

For those looking to borrow a higher amount of £25,000 over 36 months, the lowest rate available for both existing and new customers is 2.9% APR, which is available from four providers including TSB. Along with TSB, Clydesdale Bank, Sainsbury’s Bank and Yorkshire Bank all offer this rate. Nationwide Building Society also offers this rate, but again, its loan is only available to existing customers.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It’s fantastic to see TSB cut loan rates for prospective borrowers. Consumers may well be looking to consolidate debts or perhaps to fund some home improvements, so the 2.9% APR may be enticing. It is worth remembering that not all loan customers will be granted the advertised APR, as this would be offered to 51% of successful applicants. In the meantime, if borrowers are keen to take advantage, then they would be wise to review their credit score – such as with a credit report from Experian – to make sure they are in the best possible position before they apply.”