Market-leading loan rates fall below 6%

Derbyshire BS and Sainsbury's have jumped to the top of the personal loan best buy tables by cutting their rates to less than 6%.

If you need to borrow money but are worried about the cost, the fact that Derbyshire Building Society has slashed its personal loan rate will be welcome news.

Now customers wanting to borrow anything between £7,500 and £14,999 over five years can apply for a market-leading rate of 5.9%.

This is the lowest the Nationwide Group (which owns the Derbyshire) has ever gone for personal loans.

5.9% is the new 6%

Derbyshire is not the only lender to cut its personal loan rate below 6% though. Sainsbury's has also moved its rate for loans of between £7,500 and £15,000 over a five-year term to 5.9%. In fact, you can get an even lower rate of 5.8% should you agree to pay the loan off quicker, over a term of one to three years.

And Barclays has cut the rate it offers on loans of between £10,000 and £25,000 from 6.2% to 5.9%.

The Barclays loan is available over two to five years and comes with a price match guarantee giving customers a £50 one-off payment if they can find the loan cheaper elsewhere within 30 days. But the catch is these loans are only available to existing customers and you have to borrow more than Derbyshire and Sainsbury's to activate the best rate.

Borrowing £7,500 over five years

Here is a roundup of the most competitive loans available for borrowing £7,500 over five years, ranked by lowest typical APR.

Provider

Typical APR

Monthly repayment

Total amount repayable

Derbyshire

5.90%

£144.11

£8,646.60

Sainsbury's Bank
Standard Nectar Cardholder Loan

5.90% 144.11 £8,646.60

Clydesdale Bank
Online Personal Loan

6.00%

£144.44

£8,666.40

Tesco Bank

6.00%

£144.44

£8,666.40

M&S Personal Loan

6.00%

£144.44

£8,666.40

HSBC
Existing Customer Personal Loan

6.20%

£145.10

£8,706.14

Nationwide BS
New Customer Personal Loan

6.80%

£147.09

£8,825.40

NatWest
Existing Customer Online Personal Loan

6.90%

£147.42

£8,845.20

Zopa
Personal Loan A*

7.70%

£150.07

£9,004.20

AA
Personal Loan

7.90%

£150.74

£9,044.40

The Cooperative Bank

7.90%

£150.74

£9,044.40

What are the chances?

When taking out a loan you should remember that the attractive advertised rate is not necessarily the rate you will be given if you're accepted.

Lenders like Derbyshire are only obliged to give the headline price to 51% of applicants while the rest can expect to receive a higher rate.

Read What REALLY damages your credit rating and make sure you check your credit profile to avoid being part of the 49%.

The alternatives

If you need to borrow money you don’t always have to turn to a loan.

One alternative is to take out a 0% credit card. This could be more appropriate for your needs and help you cover costs without incurring any extra debt for a set period.

Of course this is under the proviso that you pay the amount back during the interest-free period!

Take a look at: The best ways to borrow £5,000 for more ideas.

More stories on loans:

Sainsbury's Finance: top personal loan rates fall to 5.9%

Three ways to get an interest-free loan

Amigo Loans and the dangers of being a guarantor

Sainsbury's launches price guarantee for loans

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