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Marks & Spencer cuts rate for medium-sized loans to 7.3%
If you're shopping around for a medium-sized personal loan, then news that Marks & Spencer has slashed its rates on lending between £5,000 and £7,499 to 7.3%, should be of interest.
Astonishingly, this price drop represents a massive 5% cut on the retailer’s previous rate of 12.9% for medium-sized loans over 12 to 60 months.
So what has this drastic cut done to the leader boards?
Borrowing £5,000 over three years
Provider | Typical APR | Monthly repayment | Total amount repayable |
Zopa Personal Loan A | 7.20% | £154.39 | £5,558.04 |
Marks and Spencer Personal Loan* | 7.30% | £154.54 | £5,563.44 |
Sainsbury's Bank Standard Nectar Cardholder Loan | 7.50% | £154.97 | £5,578.92 |
Derbyshire BS Personal Loan | 7.60% | £155.18 | £5,586.48 |
SAVVI loans from Hitachi Capital | 7.70% | £155.40 | £5,594.40 |
Clydesdale Bank Personal Loan | 7.80% | £155.61 | £5,601.96 |
Tesco Bank Personal Loan | 7.80% | £155.61 | £5,601.96 |
Sainsbury's Finance Shopper Reward (Small) | 8.70% | £157.54 | £5,671.44 |
??Bank of Ireland Standard Loan | 8.80% | £157.75 | £5,679.00 |
RateSetter Three-Year Unsecured Loan | 9.70% | £159.25 | £5,733.00 |
*Need to be over 30 or a homeowner
Borrowing £5,000 over five years
Provider | Typical APR | Monthly repayment | Total amount repayable |
Marks and Spencer Personal Loan* | 7.30% | £99.16 | £5,949.60 |
Zopa Personal Loan A | 7.40% | £99.38 | £5,962.80 |
Derbyshire BS Personal Loan | 7.60% | £99.83 | £5,989.80 |
Sainsbury's Bank Standard Nectar Cardholder Loan | 7.60% | £99.83 | £5,989.80 |
SAVVI loans from Hitachi Capital | 7.70% | £100.05 | £6,003.00 |
Clydesdale Bank Personal Loan | 7.80% | £100.27 | £6,016.20 |
Tesco Bank Personal Loan | 7.80% | £100.27 | £6,016.20 |
Sainsbury's Finance Shopper reward (Small) | 8.70% | £102.27 | £6,136.20 |
RateSetter Five-Year Unsecured Personal Loan | 10.20% | £105.63 | £6,337.80 |
Lloyds TSB Personal Loan | 11.10% | £107.65 | £6,459.00 |
*Need to be over 30 or a homeowner
For such a drastic cut in rates M&S has not quite set the leader boards alight.
M&S is best on borrowing £5,000 over one, four and five years. But peer-to-peer lenders, Rate Setter and Zopa, have better deals on borrowing £5,000 over two and three years.
However, the cuts have made M&S more competitive, which could cause lenders on the top to get nervous. This closeness could spark another mini rates war among the top lenders vying for borrowers, the likes of which we have seen for larger loans between £7,500 and £15,000. Read about what’s been happening in this article: Market-leading loan rates fall below 6%.
What about loans at the larger end of the medium-sized market?
Borrowing £7,499 over three years
Provider | Typical APR | Monthly repayment | Total amount repayable |
first direct* | 6.10% | £227.92 | £8,205.12 |
HSBC Personal Loan* | 6.20% | £228.24 | £8,216.64 |
Zopa Personal Loan A | 7.20% | £231.39 |
|
Marks and Spencer Personal Loan** | 7.30% | £231.78 | £8,344.08 |
Sainsbury's Bank Standard Nectar Cardholder Loan | 7.50% | £232.42 | £8,367.12 |
Derbyshire BS Personal Loan | 7.60% | £232.74 | £8,378.64 |
SAVVI loans from Hitachi Capital | 7.70% | £233.06 |
|
Clydesdale Bank Personal Loan | 7.80% | £233.38 | £8,401.68 |
Tesco Bank Personal Loan | 7.80% | £233.38 |
|
Sainsbury's Finance Shopper reward (Small) | 8.70% | £236.28 | £8,506.08 |
*Only available to existing customers
** Need to be over 30 or a homeowner
Borrowing £7,499 over five years
Provider | Typical APR | Monthly repayment | Total amount repayable |
first direct Personal Loan* | 6.10% | £144.75 | £8,685.00 |
HSBC Personal Loan* | 6.20% | £145.08 | £8,704.80 |
Marks and Spencer Personal Loan** | 7.30% | £148.72 | £8,923.20 |
Zopa Personal Loan A | 7.40% | £149.16 | £8,949.60 |
Derbyshire BS Personal Loan | 7.60% | £149.72 | £8,983.20 |
Sainsbury's Bank Standard Nectar Cardholder Loan | 7.60% | £149.72 | £8,983.20 |
SAVVI loans from Hitachi Capital | 7.70% | £150.05 | £9,003.00 |
Clydesdale Bank Personal Loan | 7.80% | £150.39 | £9,023.40 |
Tesco Bank Personal Loan | 7.80% | £150.39 | £9,023.40 |
Sainsbury's Finance Shopper reward (Small) | 8.70% | £153.39 | £9,203.40 |
*Only available to existing customers
** Need to be over 30 or a homeowner
Again, rate slashing hasn’t taken Marks & Spencer to the top of the table when it comes to loans of £7,499 taken out for up to five years. First direct offers an amazing 6.1% and HSBC 6.2% at the top end of the spectrum on medium loans - over 1% cheaper than M&S. However, these deals are reserved for existing customers only. For more deals that reward existing customers check out Do loyal customers get a better deal?
What if you borrow £1 more?
Marks & Spencer’s 7.3% rate applies to loans between £5,000 and £7,499.
But by tipping the scales and adding just one pound to the total you needed to borrow you would be able to access a much cheaper loan.
M&S will offer 6% for a loan of £7,500 taken out over 12-60 months.That's 1.3% cheaper.
So borrowing £7,499 with M&S at 7.3% over five years will cost £8,923.20. But borrowing a quid extra at £7,500 you get a rate of 6.0% with M&S, which means the total amount repayable is £8,665.80. That’s a saving of £257.40 on the cost of the loan- by spending one pound more! How bizarre!
It could be even cheaper to tip the scales as M&S is not the market leader in this category of larger loans between £7,500 and £15,000. You could take get a loan of £7,500 with Sainsbury’s for 5.8% over three years, or 5.9% over four and five with Clydesdale Bank.
Larger borrowing needs
If you need to borrow a lot more than an extra pound, say £10,000, this is what the costs will look like spread over five years.
Provider | Typical APR | Monthly repayment | Total amount repayable |
Clydesdale Bank Personal Loan | 5.90% | £192.15 | £11,529.00 |
Derbyshire BS Personal Loan | 5.90% | £192.15 | £11,529.00 |
Sainsbury's Bank Standard Nectar Cardholder Loan | 5.90% | £192.15 | £11,529.00 |
Yorkshire BS Personal Loan | 5.90% | £192.15 | £11,529.00 |
Tesco Bank Personal Loan | 6.00% | £192.59 | £11,555.40 |
Marks and Spencer Personal Loan* | 6.00% | £192.59 | £11,555.40 |
first direct** | 6.10% | £193.03 | £11,581.80 |
HSBC Personal Loan** | 6.20% | £193.47 | £11,608.20 |
Nationwide BS | 6.80% | £196.12 | £11,767.20 |
NatWest | 6.90% | £196.56 | £11,793.60 |
* Need to be over 30 or a homeowner
** Only available to existing customers
Excellent credit
No one wants to pay over the odds when they borrow money. That’s why seeking out the best deal is so important when looking for a loan. But the headline rate isn’t for everybody.
Lenders like M&S only have to supply the advertised rate to 51% of those that apply. Those that succeed usually have an excellent credit history. The 49% that fail to get that top rate don’t.
It is a good idea to check the status of your credit record before applying to get a loan. You can check your credit report for free. But if you find that the report is damning, learn how to build an excellent credit history before reaching for the best rates.
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