Best personal loan rates fall below 6%

By Joel Stanier

Borrowers can now find personal loans with an interest rate of just 5.8%, according to analysis of the market by MoneySupermarket.com.

Based on loans of £7,500 - the minimum amount for many lenders - Sainsbury's Bank currently offers the cheapest deal on three-year loans at 5.8%. Or for a five-year repayment period, both Sainsbury's and Derbyshire Building Society offer personal loans at 5.9%.

It's the lowest personal loan rate on offer since 2006, according to the research. The average rate across the top five 'best buy' deals for a £7,500 loan has fallen to 6%.

Personal loan rates have been steadily falling in recent years. According to statistics from the Bank of England, average rates actually rose just after the Bank lowered the base rate to the current all-time low of 0.5% - but since the beginning of 2010 average rates have fallen nearly every month.

This spells good news for would-be borrowers, says a loans expert at Think Money. "Any fall in interest rates will make borrowing that little bit less of a strain on the wallet. That's not to say everyone should rush out and borrow money - but it's become more affordable in recent years for those who do.

"It also helps to increase choice for borrowers. For example, someone buying a car could choose between a personal loan, dealer finance or even a low-cost credit card, depending on which is cheapest for them.

"As with any borrowing, though, people should only take out a loan if they're sure they can comfortably afford the repayments."

Image © Fotolia / Sean Gladwell

Tags: loans, personal loans, rates, loan rates, best loan rates, MoneySupermarket

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