Sainsbury’s Finance has reduced the cost of its personal loans, with the lender cutting its rate for a loan of £7,500 to a market leading 5.8 per cent, the lowest since November 2006.
The rate, which was introduced last week, applies to loans of £7,500 taken over three years and is only available to Nectar Card holders. Borrowing the same amount over a longer period comes with a new lower rate of 5.9 per cent, the same as what Derbyshire Building Society are currently offering.
According to MoneySupermarket.com, the move means that the average rate for the top five personal loans at £7,500 now stands at 6 per cent, over 2 per cent less than the typical rate in December 2008 which stood at 8.10 per cent.
Tim Moss, MoneySupermarket’s head of loans and debt, said: “The launch of the lowest personal loan rate since 2006 is great news for anyone who is looking to borrow .
“With heavy competition in the savings market and margins on credit cards and mortgages tight, it appears that some banks may be refocusing their efforts on the loans market.”
He added that the rate reduction by both Sainsburys Finance and Derbyshire BS could lead to similar moves by other lenders, which would help “bring down the cost of borrowing for consumers”.