31% Of Personal Loans Could Be Used To Consolidate Debts In The New Year

30 January 2017

  • Consolidating debts can be a good way to obtain a fixed, lower interest rate on outstanding balances
  • Sainsbury’s Bank Loans continue to offer fantastic interest rates for unsecured personal loans

New research(1) from Sainsbury’s Bank Loans reveals that more than 180,000 people across the UK could take out personal loans for debt consolidation in the first three months of 2017, worth more than £2 billion.

This figure(1) equals an estimated 31% of all personal loans taken out in the first three months of the new year. The estimated average loan size is projected to be around £11,400 – nearly a fifth (18%) more than the average value of loans not intended for consolidating debts (£9,600). This means that the total value of loans taken out between January and March 2017 for debt consolidation will account for more than a third (35%) of all loans during this period.

Sainsbury’s Bank is encouraging those looking to consolidate debts to ensure their monthly repayments will be lower under the terms of the new loan and that they are able to cover any fees from their old lenders before borrowing.

Smon Ranson, Head of Banking at Sainsbury’s Bank said: “Personal loans can be a fantastic debt consolidation tool, enabling borrowers to lower their monthly repayments and unify their debts and payments under one provider. However, in order to justify the new loan you’ll need to work out if the interest paid on the consolidated balances by the end of the repayment term will be lower than the interest you would have paid under your existing arrangements..”

Sainsbury’s Bank has a loan switcher calculator to help customers gauge whether they might save money by switching their existing loan to a Sainsbury’s Bank loan.

The Bank, which consistently offers competitive interest rates on personal loans, also has a Price Promise Guarantee. This means that if a customer is offered a “like for like” loan that has a lower APR with another lender, Sainsbury’s Bank will beat it by 0.1%. This is subject to qualifying for the Offer and customers must not have already accepted its Standard Loan offer by signing and returning a Sainsbury’s Loan agreement(2). Car dealership loans and finance excluded.

For further information on Sainsbury’s Bank Loans visit www.sainsburysbank.co.uk/loans or pick up a leaflet instore at Sainsbury’s.

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This press release is information for journalists only and is not intended to be a promotion to be acted upon by consumers.

Notes to Editors

  • Based on analysis of loans issued by Sainsbury’s Bank between January and November 2016. Analysis is based on all loans that were taken out either all or in part for this purpose, including paying off overdrafts and credit cards. Figures represent estimates for the first three months of 2017 (January, February and March), based on the data for corresponding months in 2016. All national data is based on Sainsbury’s Bank’s market share.
  • Multiple credit searches may make obtaining future credit more difficult. Price Promise Guarantee Terms and Conditions: The Price Promise Guarantee (“the Offer”) is only available to individuals who successfully apply for (and subsequently open) a Sainsbury’s Standard Loan (“the Loan”). The offer does not apply to any Sainsbury’s Reward Loans. Claims under the Offer must be received within 28 days after the Sainsbury’s Loan has been approved. Claims under the Offer will not be accepted after the Sainsbury’s Loan offer has been accepted by signing and returning the Sainsbury’s Loan agreement. Customers must provide us with a written offer from the other lender in the same name as the Loan offered by Sainsbury’s. In most cases a photocopy of the loan agreement will suffice but we may ask customers to provide the original agreement. If customers provide an original document, we will return this to the customer within 5 days of assessing the customer’s claim. Photocopies will not be returned and will be securely destroyed by us. Sainsbury’s will verify the validity of the customer’s claim within 5 business days of receiving the customer’s request and notify the customer of the result. A “Lower rate” means a lower Annual Percentage Rate (APR) of an alternative unsecured, fixed rate loan from a lender, compared on a “like for like” basis. We will assess “like for like” based on features such as, but not limited to, length of loan, fixed loan amount, repayment structure (including interest and set up fees (if any). The Lower rate must be available to the general public and be verifiable by Sainsbury’s. The Lower rate must have been offered and must still be available to the customer at the time of the claim. The Offer does not apply to the following rate or loan types:

Loans where the funds are not available for immediate use

Discount rates offered only to members of groups or individuals who meet previously specified criteria;

Rates that are not immediately available, promotions that are not at everyday rates and products which are sold under different terms and conditions, such as special financing (i.e. dealer loans, promotional loans for specific goods);
Loans that are secured on land, investments or goods.

Any personal products being charged interest at a variable rate;

Any personal and non personal loan type products including but not limited to lease, contract hire, hire purchase or conditional sale agreements;

Loan agreements where interest has been temporarily or permanently suspended (including deferred payments and 0% loans for an initial period);

Loan agreements where the funds are to support periods of study, or the period immediately following completion of studies (for example, student loans or graduate loans).

If the claim is successful we will reduce the APR on the Sainsbury’s Loan to below that of the alternative lender by 0.1%. e.g. If the alternative lender formally offers the customer a rate of 6.9% APR, the claim is successful and 6.9% APR is lower than our rate offered we will reduce our offer rate to 6.8% APR. We reserve the right to modify or cancel the Offer at any time without prior notice.

Sainsbury’s Bank

Sainsbury’s was the first major British supermarket to open a bank, commencing trading in February 1997. Benefiting from a fantastic, trusted brand that enables us to combine the shopping experience with personal finance, Sainsbury’s Bank provides a range of quality products including insurances, credit cards, savings and loans. Our proposition is to make shopping more rewarding by offering customers great products at fair prices, while consistently rewarding shoppers for their loyalty and being easy to do business with at all times. Our products consistently top best buy tables and regularly win awards for quality, price and service.

Sainsbury’s Bank plc. Registered Office, 33 Holborn, London EC1N 2HT (registered in England and Wales, no 3279730) is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (register no. 184514). Sainsbury’s Bank plc is covered by the Financial Services Compensation Scheme (FSCS).