Cheap loans to lure spenders pre-VAT hike
Nationwide and Tesco slashed personal loan rates this week, bringing costs down to 7.7% for new customers.
Cheap loans: New customers at Tesco and Nationwide can get slashed personal loan rates before the VAT-hike
Nationwide flexAccount customers can benefit from an even lower rate of 7.6% on five-year loans between £7,500 and £14,999. Repayments on a £10,000 loan would be £199.66 a month.
New customers must apply using comparison site Moneysupermarket.com. The average advertised loan rate is 10.1%, according to comparison site Moneyfacts.co.uk.
Tesco and Nationwide are looking to lure customers who need a loan for a new car or who want to make large purchases now, before the rise in VAT to 20% from January.
Michelle Slade, of comparison site Moneyfacts.co.uk, says: 'While these interest rates do seem low, they are typical and therefore only 66% of customers will be offered the rate. Others with a problematic credit history will be offered a higher rate.'
Nationwide offers 'personal pricing' on all loans outside the £7,500 and £14,999 bracket, which means borrowers have no idea how much interest they will be charged until they apply.
However, the building society provides customers with a 'realistic idea' of the actual rate they would pay, without leaving a mark on the customer's credit file.
A borrower's credit file may be impaired if lenders record multiple applications for credit.
A spokesman for Nationwide says: 'This means that customers can shop around for the best deal without it affecting their ability to get credit elsewhere.'
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