14:38 19 November 2012
The personal loan rate battle has stepped up yet again, with M&S slashing the cost of its personal loans to the lowest ever representative annual percentage rate (APR) offered by the retail bank - 5.5%.
Available on borrowing of between £7,500 and £15,000, this market-leading new rate marks a significant reduction on the bank's previous rate of 5.8%.
And storming in at the top of the best buy tables, it is likely to prove highly appealing to anyone currently looking for medium-sized borrowing.
However, there are a few things to be aware of before you apply.
Here, we take a closer look at the offer and investigate how it stacks up against the closest competition.
What's the deal?
The new representative APR of 5.5% applies to M&S personal loans of between £7,500 and £15,000, taken out over one to five years.
The new improved M&S rate stands alongside Moneyback bank's headline APR also of 5.5% (offered for a short time in 2006) as the lowest ever personal loan rate offered.
Other benefits of the deals include that you can choose to make your repayments by direct debit from your current account and there are no arrangement fees to take into account.
The total cost of borrowing £7,500 over three years at this rate would therefore be £8,136.36 - based on monthly repayments of £226.01.
Someone borrowing £12,500 over five years, meanwhile, would have monthly repayments of £237.98 and repay a total of £14,278.80.
And a borrower needing £15,000 over five years would pay £285.58 a month or £17,134.80 overall.
You can only get this headline rate on loans of between £7,500 and £15,000. Smaller or larger loans from M&S will come with a higher representative APR.
As this is the market-leading deal, M&S can also afford to be choosy about who it takes on as a customer.
So, if your credit score is less-than-perfect, you are therefore unlikely to be offered a loan with a representative APR of 5.5%.
And certain other boxes must be ticked for you to qualify for the deal.
You must, for example, be a UK resident and either over the age of 30 or a homeowner, while other qualifying criteria includes having a UK bank or building society account and a valid email address.
There is also an early redemption charge, meaning that you cannot pay off the loan without penalty should you receive an unexpected windfall.
What's the verdict?
This great new rate knocks Derbyshire Building Society - which charges a headline rate of 5.6% - off the top spot for personal loans of between £7,500 and £15,000.
It is also a fairly flexible deal, allowing you to repay the loan over as little as 12 months or as long as five years.
As such, it is a great offer for all borrowers who are looking for a loan of this size and have a high enough credit score to qualify.
It goes without saying there is no point borrowing more than you need to - or paying more than you need to borrow it.
And the good news is that anyone with a good credit score can avoid interest altogether on smaller amounts by opting for a credit card offering an introductory rate of 0% instead.
Depending on what you need to borrow money for, options include the Barclaycard Platinum Credit Card with Extended Balance Transfer, which offers 23 months at 0% on transfers (subject to a 2.8% fee) while the Tesco Clubcard Credit Card for purchases, gives new customers 16 months at 0% on everything they buy.
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