Updated: Mon, 10 Sep 2012 01:00:00 GMT

Tesco and Sainsbury's cut loan rates

Tesco and Sainsbury's cut loan rates

Tesco and Sainsbury's cut loan rates

Tesco and Sainsbury's cut loan rates

If you need a loan, head to a supermarket, as Tesco and Sainsbury's have cut their rates.

In the aftermath of the credit crunch, the interest rates charged on personal loans soared. Pre-crash rates of under 6% APR disappeared, leaving loans much more expensive.

However, this year has seen a steady decrease in the rates lenders charge for personal loans. Indeed, banks, building societies and other lenders have once again started competing aggressively for new unsecured lending.

Tesco's special offer for loans

Some of the biggest participants in this new rate war are the supermarkets, which have slashed their loan rates. For example, Tesco Bank -- the financial arm of the UK's biggest supermarket -- reduced its loan rates last week.

Until midnight on 24th September, Tesco Bank loans of between £7,500 and £15,000 will be available at a reduced rate of 5.7% APR. This is a cut of 0.2% from Tesco Bank's previously advertised rate of 5.9% APR.

These loans are available online or over the phone, but not in Tesco stores. Rates and monthly repayments are fixed throughout the life of these loans. Also, borrowers can choose their repayment date and even take a repayment break of up to three months at the start of a loan (which bumps up the interest bill).

Sainsbury's follows suit

Often, where Tesco goes, Sainsbury's is soon to follow, as the UK's giant grocers fight tooth and nail for a larger share of our wallets and purses.

So just a day after Tesco cut its rates, Sainsbury's followed suit, cutting its rates for unsecured personal loans of £7,500 to £15,000 as follows:

  1. For loans lasting one to three years: 5.7% APR; and
  2. For loans over four or five years: 5.8% APR.

Again, this makes Sainsbury's Bank one of the market leaders for table-topping loans of £7,500 or more.

Cheap loans: six of the best

To show you how cheap supermarket loans really are, here's the latest best buy table for a personal loan of £7,500 over three years:


and loan











Tesco Bank

Personal Loan






Available until midnight of 24/09/12.

Sainsbury's Bank

Standard Nectar

Cardholder Loan






Applicants must have used a Nectar card at Sainsbury's in the past six months.

Derbyshire BS

Online Personal Loan






Clydesdale Bank

Online Personal Loan






Yorkshire Bank

Online Personal Loan






M&S Money

Personal Loan






Applicants must be aged 30+ or a homeowner.

Within a whisker of all-time lows

As you can see, Tesco Bank takes top spot in this table, with a loan of £7,500 over 36 months producing monthly repayments of £226.65. Sainsbury's is right behind Tesco, thanks to repayments just 1p higher, making its loan 36p more expensive over three years.

After the two supermarkets comes a building society (Derbyshire BS, owned by Nationwide BS), followed by Clydesdale Bank and Yorkshire Bank (both owned by National Australia Bank). In sixth place is another retail brand, M&S Money (backed by mega-bank HSBC).

With Tesco, Sainsbury's and M&S all in the top six for Best Buy personal loans, it's clear that Britain's high-street banks are certainly not the place to go for cheap loans.

More on loans:

Find the perfect personal loan

Top tips for cheap car loans

Five ways to get a great loan

Three ways to get an interest-free loan

How to get a loan when the bank says no

10 top tips for personal loans

10 reasons to make MSN UK your homepage (© Microsoft)

more on msn money

  • A "Fat Cat" protester outside Royal Bank of Scotland in London on January 25, 2012  A "Fat Cat" protester outside Royal Bank of Scotland in London on January 25, 2012 © Kirsty Wigglesworth - AP

    Tough new measures to rein in bankers' bonuses have been announced by City regulators. But will they really help to build a more responsible financial sector or will the Fat Cats still get their cream?

  • Image  Image © JT Clarke London

    This terraced house in Peckham is on the market for £650,000. But the squatters who used to live there left it in quite a state...

  • Image(©© Zoopla)

    The recent run of glorious hot weather has prompted Zoopla to pick its top 10 homes for sale with splendid sea views. We take a stroll along the beach to scan the horizon.

  • “The dog ate my tax forms”  “The dog ate my tax forms” © Joshua Blake - Getty

    With the deadline for tax credits renewal fast approaching, HMRC has released its top ten favourite excuses for late submissions.

  • New best buy savings bonds, but with a few twists

    Castle Trust's new Fortress Bonds pay market-leading interest rates, but aren't quite the same as a normal savings account.

  • Glass flat with coloured lighting(©Image © UK Sotheby’s International Realty)

    Built atop two different buildings, this glass penthouse is out of this world…

  • Adele, Lock House(©© Ian West – PA, Rightmove)

    A Grade II-listed country house recently vacated by pop star Adele has been placed on the market for £6 million. Let’s take a look around…

  • The Residences by Armani Casa © Hayes Davidson  The Residences by Armani Casa © Hayes Davidson

    This stunning new residential apartment tower is currently under construction in Sunny Isles, Miami, and its name has a familiar ring to it.

  • Be quick to beat rising mortgage rates

    The Bank of England's Base Rate may still be at 0.5%, but mortgage rates are rising. So if you're looking for a new mortgage between now and next March, here's why you should act now.

  • Image  Image © Tim Graham - Getty - Nigel Kirby - Loop

    Accountants at UHY Hacker Young have ranked Britain’s towns in order of how much income tax they pay per person every year. But which town pays back the most and which the least?

  • Bedroom(©Zoopla)

    Take a peek inside the tiny London studios making headlines - and a few more that will shock you!

  • Image  Image © Luke MacGregor – Reuters

    Chancellor George Osborne has announced a series of radical reforms to the UK's pensions industry. But will his changes really give our pensioners greater control over their retirement funds or will they just blow it all on Lamborghinis?

msn money poll

Do you support the new banking inquiry?

Thanks for being one of the first people to vote. Results will be available soon. Check for results

    27 %
    Yes, I think the Big Four are too powerful and resistant to change
    2,519 votes
  2. 73 %
    No, I don’t believe it will result in real change that will benefit the consumer
    6,794 votes

Total Responses: 9,313
Not scientifically valid. Results are updated every minute.