Personal loan rates increase by 17%

There has been a 16.74% increase in the average interest rate on personal loans of £5,000 in the last two years alone, according to research by Sainsbury's Finance. The analysis, which compared all published interest rates on £5,000 loans for the months of September 2008 and September 2010, reveals that the average interest rate on a £5,000 loan has gone up from 10.67% APR typical to 12.45% APR typical in just two years.

Against this backdrop of increased loan rates, Sainsbury's Finance is one of just three banks whose published interest rates on loans of £5,000 have decreased.  The supermarket bank offers customers a market-leading rate of just 8.7%, which is 3.75 percentage points below the current average loan rate.

Sainsbury's Finance's research reveals that the majority of lenders have increased the interest rates they offer on £5,000 loan balances.  Currently only six lenders publish rates below 9% APR Typical on a £5,000, this compares with 11 lenders who published a rate of less than 9% in September 2008.  Furthermore two in three (67%) providers were publishing interest rates in September 2008 of 10.9% or less APR typical on a £5,000 loan, compared with just one third (33%) of providers' published rates today on the same loan value.

When looking at loans between £7,500 and £14,999, Sainsbury's Finance is also a member of an elite club offering one of the most competitive personal loan rates available at 7.7% APR typical, just one of just three personal loans in September 2010 offering a published sub-8% APR typical rate.  This compares with just 10 providers publishing a sub-8% APR typical rate on this loan balance in September 2008.

Steven Baillie, Head of Loans, Sainsbury's Finance, said: "Our analysis highlights the great fluctuation in the personal loans market and the importance of shopping around.  The past two years have seen a big increase in published interest rates for £5,000 loans, however we have consistently offered competitive rates and are committed to doing so."

In addition to the most competitive rate in the marketplace, customers taking out a benefit from:

A personally tailored repayment period, from 1 to 7 years
Fixed repayments for the whole period of the loan
An instant decision
Money directly into your bank account

For further information on a Sainsbury's Finance Loan, visit sainsburysfinance.co.uk.