Focus on: Grab a market-leading loan rate at 5%!

Here, we take a closer look at how the deal compares to the rest of the market.

12:02 25 April 2013

Whether you need a bit of extra cash to buy a new car, fund a summer wedding or pay off expensive debts, the good news is that the cost of borrowing between £7,500 and £15,000 has fallen to a record low 5%.

 

Sainsbury's Bank has cut the rate on its Sainsbury's Shopper Standard Loan from 5.1% to 5%, putting it at the top of the best buy table for loans of this size.

 

Here, we take a closer look at how the deal compares to the rest of the market.

 

What's the deal?

 

Sainsbury's Bank's new 5% loan rate is available on amounts of between £7,500 and £15,000 over a repayment period of between one and three years.

 

The cost of a £10,000 Sainsbury's Shopper Standard Loan taken out over the maximum three years would therefore be £772, based on 36 monthly payments of £299.21. And if another lender offers you a lower rate on a like-for-like loan, Sainsbury's promises to beat its offer by 0.1%.

 

The market-leading deal is also flexible. Borrowers taking out the loan can choose to start repaying it immediately or take a three-month repayment holiday at the start of the term.

 

Interest will still be charged from the start date of the loan if you choose, though, making it a slightly more expensive option.
 
Who's it good for?

 

This is the best deal for anyone needing to borrow between £7,500 and £15,000 over a period of up to three years, whether that's to make home improvements, fund a new car or even pay off more expensive debts.

 

The flexibility to start repaying the loan three months after taking it out may also appeal to those in need of a bit of financial breathing space.

 

Any catches?

 

The rate will be higher if you need to borrow more than £15,000 or less than £7,500.

 

The repayment term of one to three years is also relatively short - most of the loans in this category can be taken out over up to five years, allowing borrowers to spread the cost over a longer period.

 

Being offered the market-leading 5% rate is dependent on your personal circumstances, with some customers only qualifying for a higher interest rate.
The deal is also only available to Nectar cardholders who have had their cards swiped in-store or used them on the Sainsbury' website within the last six months.

 

What's the verdict?

 

This is the cheapest medium-sized loan deal available at the moment.
As such, it offers great value for money for the right borrower.
You will need to have the funds to repay the loan within a maximum of three years, though.

 

Anyone who would prefer to take longer paying back a loan would therefore be better off with a Clydesdale Bank Personal Loan, which is available over up to five years, at the marginally higher rate of 5.1%.

 

Top tip!

 

While this new loan rate from Sainsbury's Bank is the best on the market, there is still a cheaper way to borrow - especially if you only need to access a smaller amount of cash.

 

Many of the top credit cards available today offer 0% for an introductory period on balance transfers or purchases - or in some cases both.

 

If you are disciplined enough, you can therefore borrow money completely free of charge.

 

Cards offering 0% on purchases include the Tesco Clubcard Credit Card for Purchases, which gives you 16 months at 0% before its representative APR of 16.9% (variable) kicks in.

 

If you need a loan to pay off debts, meanwhile, the Barclaycard Platinum Credit Card with Extended Balance Transfer offers an incredible 26 months interest-free borrowing, subject to a 3.5% fee.

 

You must clear the balance in that time, however, to avoid the card's representative APR of 18.9% (variable).

 

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.