Checkout the cheapest loan providers

A recent study by market analysts Moneyfacts.co.uk have let a rather surprising cat out of the shopping bag. According to their latest figures, for an unsecured loan of £10,000 over a five year period, three out of six of the cheapest interest rates on offer were from UK supermarkets.

With Marks and Spencers entering the fray last week, dropping their rate for similar loans between £7,500 to £15,000 over the same period to an inflation-like rate of 6.0%, it made lending figures the lowest for almost five years. You have to go back to early 2007 to find a recorded lower rate, when you could have picked up a like-for-like loan at 5.8% APR, but they have been nowhere near, since.

You only have to look back twelve months to bear this statement out, when this loan would have cost you 40% more in interest at 8.4%.

Consolidation is the name of the game

As more and more people look to short term loans for significantly smaller amounts, there is always the danger of individuals biting off more than they can chew. A spokeswoman for Moneyfacts.co.uk who compiled the latest set of figures hinted that this type of mid-sized loan could be perfect for people who are looking to consolidate many smaller debts, picked up recently whilst interest rates have been markedly higher.

Seven lenders have dwarfed interest rates this year

In addition, Rachel Springall confirmed that seven lenders in all have reduced their rates since the turn of the year. With The Bank of England capping its interest rate at 0.5% for the foreseeable future to enable economic growth, it is highly possible that more lenders will follow suit, even returning to the 5.8% APR rate of five years ago, or possibly lower

Why are instant cash loan rates so much higher, often over 2,000% APR?

Pay day loans, or short-term loans, are considerably higher for two main reasons. Firstly, the duration of the loan – a maximum of 30 days, in the majority of instances – has a lot to do with it, and traditional rates would mean cash advance lenders would soon go out of business if they lent at such low rates. A loan of £500 over 30 days at 6%APR would generate less than £5 in profit, making it not worth the risk, as many short term loans are offered without credit checks, which is the second reason why the interest rates are so high, in comparison.

When taking out an instant cash loan, the figure you should concentrate is the actual amount of difference between what you lend and what you have to pay back on the arranged date.

The other two supermarkets in the top six were Tesco Bank and Sainsbury’s Finance. The Post Office was sixth, with Nationwide Building Society and Santander the only two traditional lending sources to feature.

If you’re not ready for a five year commitment and just need a little to tide you over until payday, why not check out our top performing instant cash loan specialists?

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