Sainsbury'sSainsbury's is guaranteeing that its personal loans are the best on the market.

Sainsbury's is making a splash in the personal loan market at the moment.

For starters, it's offering a market-leading 5.9% rate on some personal loans.

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If you want to borrow £7,500 for just three years, you may be able to get that super-low 5.9% rate. If you want to borrow for the more usual five-year period, Sainsbury's is offering loans at a still very attractive 6.1%. Read more in Top personal loan rates fall to 5.9%.

Guarantee
And now on top of these low rates, Sainsbury's is introducing a 'Price Promise Guarantee.'

Here's the deal: if you successfully apply for a Sainsbury's standard loan, and then secure a better rate with another provider, Sainsbury's will then beat your better offer by 0.1%.

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So let's say that Sainsbury's offers you a personal loan at 6.1% and you're then able to get a 6% rate from one of the its rivals. Sainsbury's will then undercut that rival deal and offer you a loan at 5.9%.

Now we should add that there are plenty of conditions attached to the offer. Here are the most important:
  • The offer applies to all Sainsbury's standard loans between £1,000 and £25,000. This includes the Sainsbury's Bank Standard Nectar loan that you'll find in the lovemoney.com comparison tables. It doesn't apply to any Sainsbury's Shopper Reward loans.
  • You must make your claim within 28 days of getting your original loan offer from Sainsbury's.
  • You can't claim if you've already accepted Sainsbury's original offer and returned a signed loan agreement.
Cheaper than Sainsbury's
But perhaps the most important condition is that you've got to find a loan that is cheaper than Sainsbury's. So let's look at what loans are on the best-buy tables for a five-year loan.

Borrowing £10,000 over five years



So if you include Tesco's loan for existing customers only, there are five loans offering a lower rate than Sainsbury's.

Should you bother?
It seems that getting a reduced rate from Sainsbury's is possible. But is it worth the hassle?

After all, at best you're only going to reduce your interest bill by 0.2% a year under this offer. You may think that's not a big enough gain to justify the rigmarole of applying for one loan and then another.

What's more, by applying for two personal loans within a short space of time, you run the risk of damaging your credit rating. If you apply for a number of financial products during a short period of time, the banks may think you're desperate for cash and a greater risk as a result.

Confidence
Perhaps the most interesting thing about the Sainsbury's offer is that it shows the bank is pushing for business and confident that it is offering good deals in the personal loan market.

So if you take out a personal loan from Sainsbury's at any point in the next month, you can be pretty confident that you're getting a competitive rate.

Just remember that however good the rate is, your loan will have to be paid back at some point, and the interest bill will mount up. So only borrow if you really need the money.

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