New price war for large personal loans



Tesco Bank has slashed the cost of its personal loans for those looking to borrow between £15,001 and £25,000.

Clubcard holders can now get a rate of 3.4% (a huge drop down from 4.8%) when borrowing over up to eight years, while non-Clubcard holders will get a rate of 3.6% (down from 5.9%).

Those looking to spread their borrowing between eight and 10 years can get a rate of 5.4% if they're Clubcard holders (down from 6.8%), while non-Clubcard holders will get a rate of 5.6% (down from 7.9%).

New price war on large loans

In recent years we've seen lenders locked into a race to the bottom when it comes to medium-sized loans between £7,500 and £15,000.

The market-leading deals in this sectors are currently at record lows of 3.3%.

But now it seems the competition has shifted, with providers vying for borrowers looking for larger loans of more than £15,000.

Sainsbury's Bank, Cahoot and First Direct have all reduced rates to 3.4% on larger loans in the last couple of months. In fact, Sainsbury's Bank has cut rates on loans of £20,000 to £25,000 to just 3.3% for Nectar cardholders, so long as you pay it back over two to three years. If you need longer, up to seven years, the rate is still a market-leading 3.4%.

How Tesco compares

Here's how Tesco compares on loans of £17,500 over five years.

Provider

APR

Monthly repayment

Total amount repayable

Sainsbury's Bank Personal Loan

3.4%

£317.17

£19,030.20

Tesco Bank Personal Loan for Clubcard holders

3.4%

£317.17

£19,030.20

First Direct Personal Loan*

3.4%

£317.47

£19,048.21

Cahoot Low Rate Personal Loan

3.4%

£317.89

£19,073.40

Tesco Bank Personal Loan

3.6%

£318.68

£19,120.80

Zopa A* Personal Loan

3.6%

£318.97

£19,138.20

Santander Personal Loan

3.6%

£318.99

£19,139.40

*Available to 1st Account holders only

What you need to know before you apply

Whether you're on the hunt for a small, medium or large loan bear in mind that you might not get the headline rate you apply for.

That's because lenders only have to offer their top rate to 51% of successful applicants.

So if you have never borrowed money before or you've been late with repayments you might be offered a worse deal.

Compare personal loan rates

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How to dispute your credit record
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New price war for large personal loans

Don't wait until you need to apply for credit to view your credit record – do it now so you know where you stand and can deal with any disputes. When applying for credit, you give the lender permission to view your record, so it makes sense to view it yourself first.

You can access your record via any of the main credit agencies in the UK. By law, all the credit agencies are required to provide you with a one-off copy for just £2 so don't be hoodwinked into signing up to pay a monthly fee.

Your report shows what credit accounts you've had and whether you've made repayments on time and in full. According to Experian, items such as missed or late payments stay on your credit report for at least three years, while Court Judgments for non-payment of debts, Bankruptcies and Individual Voluntary Arrangements stick around for around six years.

Your credit report shows the current address at which you are registered to vote as well as details of other addresses you've been linked to in the last six years. Another section lists people you have a financial connection with, such as a joint mortgage. When you apply for credit, lenders are able to look at their credit history as their circumstances could affect your ability to repay what you owe.

Scrutinise your record to make sure there are no mistakes. Even a minor error such as an incorrect address or wrongly linked account could hinder your chances of being approved for credit so make sure all your details are correct and that all your borrowings are on record. If there is a discrepancy, contact the three main credit agencies to get it corrected.

A default notice is note that a lender puts on your credit file if you fall behind with your payments. It is a warning sign to future lenders about your reliability to repay credit and could mean that they will be less likely to lend to you or will increase the interest rate.

If the default notice is incorrect, perhaps because you have repaid the loan in full or did not take out the credit and suspect that you have fallen victim to fraud, you can apply to have a default notice removed. A default notices will only be removed if it is factually incorrect – not simply because you are embarrassed by it.

Start by writing to the agency asking it to either remove or change the entry that you think is wrong. It will investigate the matter and find out whether you have been the victim of ID theft or a bank's mistake.

Within 28 days from receipt of your letter the agency should tell you how the bank has responded. If the bank agrees to change the entry, they will authorise the agency to update their records. They should also send updates to any other credit reference agencies they use.

You can also contact your lender directly to query a mistake. If the lender agrees to the discrepancy, ask them to confirm this in writing on their letterhead and send a copy to the agency, asking them to update your file.

If you are unhappy with the response or would just like to explain a missed payment on your file you can send a Notice of Correction. This is a statement of up to 200 words that will be added to your file. Although lenders don't have to take this information into account, it at least gives you the chance to tell your side of the story.

Experian states that agencies will also help you escalate the dispute to a third party arbitrator if necessary, such as the Information Commissioner's Office.

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