Marks & Spencer cuts interest rate on some loans by five percentage points to bring it into line with other providers
Marks & Spencer has become the latest lender to slash the rate it charges on personal loans, knocking five percentage points off the cost of borrowing between £5,000 and £7,499.
Loans taken out over 12-60 months will attract a rate of 7.3%, down from a previous rate of 12.9% – but while the price cut is huge, it only brings M&S’s rate marginally ahead of other lenders.
Sainsbury’s bank, for instance, is charging 7.5% on similar sized loans, while Derbyshire building society, part of Nationwide, is charging 7.6%.
Andrew Hagger of price comparison website Moneynet said the change may have come as a result of M&S reviewing its existing products following the launch of its in-store bank.
“M&S was out of kilter – you find that with some of them on loans of certain sizes,” he said. “They must have reviewed it and realised they were out of sync.”
The lender is already competitive on loans above £7,500, which have been falling in price in recent months. On deals between £7,500 and £15,000 it charges 6%, against 5.8% from Sainsbury’s and 5.9% from Clydesdale Bank.
Hagger said he thought loan rates were almost as low as they would go. “We may see lenders go maybe 0.1% or 0.2% lower, but they must be getting near the point where they are eating into their margins.”
But he warned that would-be borrowers did not just have to worry about the cost of a loan. “Just because the rates are lower does not mean loans are easier to get,” he said. “You are still going to have to have a pretty good credit record to get that headline rate.”