Savvy Britons taking advantage of record low interest rates
Around one in five (18%) people wrongly believe you are not allowed to switch a loan balance to another provider during its term, missing out on significant savings, according to Sainsbury's Bank Loans.
The supermarket bank is urging people thinking about consolidating existing borrowing to shop around, even if they have an existing loan.
Analysis of loans data by Sainsbury’s Bank Loans reveals that an estimated 637,000 consumers collectively refinanced as much as £6.5bn unsecured debt in 2013, potentially materially reducing the total cost of their borrowing as loan rates plummeted to record low rates last year.
The analysis indicates that consumers who arranged unsecured loans in the first part of the year frequently did so for the purpose of debt consolidation, with 36.2% of the money borrowed in the first quarter of 2014 for this reason, worth approximately £2.2 billion in total. The average loan size for debt consolidation during this period was £10,334, 10.1% higher than the average loan amount borrowed during this period.
To help consumers better understand the total cost of their borrowing and see if they might benefit from the leading rates offered by Sainsbury’s Bank, the supermarket bank has created a loan switcher calculator (sainsburysbank.co.uk/loans), available on its website.
Simon Ranson, Head of Banking at Sainsbury’s Bank said: “When consolidating borrowing we'd encourage people to think about all aspects of their finances. For example, if they have a number of credit cards including store credit, as well as overdrafts and existing loans. Having all of your borrowing in one place with a rate you've shopped around for could have a significant impact on your monthly outgoings.
"For example, a customer borrowing £10,000 over five years today at our leading rate of 4.5% APR could get an APR that’s 2.2% lower than the best available in 2011, saving them £115.80 per year in interest repayments."
Sainsbury’s Bank offers loans between £1,000 and £25,000 from 4.5% APR to meet a wide range of needs. In addition to highly competitive rates, customers taking out a Sainsbury’s Bank loan also benefit from:
A personally tailored repayment period, from 1 to 7 years
Fixed repayments for the whole period of the loan
Easy application process
Money transferred directly into your bank account
Customers opting for a repayment period of up to 36 months may be eligible for a further 0.1% discount to their loan rate (Nectar card holders only)
Sainsbury’s Bank has a Price Promise Guarantee on its Standard personal loans, which means that if you are offered a "like for like" loan that has a lower APR (Annual Percentage Rate) with another lender Sainsbury’s Bank will beat it.
For further information on Sainsbury’s Bank Loans, visit sainsburysbank.co.uk/loans.