Loan competition increases with further rate reductions
Competition in the personal loans market is increasing with a pricing war being conducted by several personal loan lenders, which of course is good news for borrowers.
Some loan lenders have cut their rates to below 6% and Nationwide is offering borrowers a £50 cash incentive to switch lenders.
Nationwide will pay £50 to people who switch their loans from Barclays, Lloyds TSB, NatWest, RBS, HSBC, the Bank of Scotland and the Halifax before the end of September.
The building society claims that borrowers are wasting up to £500m a year by paying over the odds in interest charges on personal loans.
Following the Bank of England's decision to cut interest rates, Abbey cut the typical rate on its loans to 5.7%, while Northern Rock decided to go one better than its competitors and cut its typical annual percentage rate (APR) to 5.6%.
There are now 10 lenders offering personal loans below 6%, meaning greater choice for consumers.
When comparing loans you should look at the TAR (Total Amount Repayable) as well as the APR (Annual Percentage Rate). The TAR reveals the total amount that you will have repay, including all monthly repayments, fees and charges. Therefore, the lower the TAR, the better the deal.