Personal loan war could be on the way

debit cardNationwide has cut personal loan rates to 6.2%. That's one of the lowest rate in the UK currently, though the deal is only for those borrowing between £7,500 and £14,999, and only for Nationwide's Flex Account customers. But the move could be the sign of an impending loan war. Rates from Tesco and HSBC have recently slipped as well. Time to go on a splurge?

Down, down

"With Christmas fast approaching, this rate is great for people looking to consolidate debt, improve their home or purchase that brand new car," says Nationwide spokesperson Graham Pilkington.

Any move downwards is good news. If you're minded to borrow around the £6,000 mark, shop around. You're unlikely to find a rate anywhere near 6.2%. Which means it might make sense to borrow more if the loan cost drops - dramatically in some cases.

It's also worth checking your own bank and asking them privately if they are prepared to do a deal. The real shame though is that rates are so expensive in the £1,000 - £6,000 segment where the competition is much less fierce.

Crimbo factor

Best of all, don't take a loan at all. Pay freezes, pay cuts, redundancy are all looming large on the work front. Throw in increasing inflation and living costs. More debt is clearly a bad move for many.

Yet the banks must know that the rising cost of living will tempt many. Some operators will also be frustrated with loan sales. So a timely - just before Christmas - attempt to drive up numbers could be on the cards. If that's the case, expect rates to tumble further. It could, then, pay you to wait.
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