John Lewis has launched a new personal loan, offering borrowers between £1,000 and £25,000.
Rates start at 2.9 per cent on amounts in the popular £7,500 to £15,000 bracket – just 0.1 percentage points above the market leader M&S Bank.
There are no hidden fees and the lender won’t charge you any extra if you choose to repay your unsecured loan early. Lenders are allowed to apply 58 days’ interest on the remaining amount.
Want a new look? Borrowers are charged as little as 2.8 per cent on personal loans
How much the no-penalty perk will save you will of course depend on your remaining balance, but it does give extra flexibility.
Unfortunately, unlike the lender’s Partnership Rewards credit card there are no loyalty points for customers taking out a loan.
The best rate John Lewis offers is 2.9 per cent on a loan of between £7,500 and £14,990. A £10,000 loan repaid over three years would cost you £290.12 per month, or a total repaying of £10,444.43.
TOP PERSONAL LOAN RATES
£3,000-£4,999: Zopa comes out on top at 5.3 per cent, followed by Hitachi Personal Finance at 7.3 per cent and Ikano Bank at 7.7 per cent.
£5,000 to £7,499: Again the best deal is offered by Zopa. It charges 3.3 per cent. Hitachi Personal Finance sits second in the tables at 3.4 per cent, while M&S Bank and Clydesdale and Yorkshire Banks charge a rate of 3.6 per cent.
£7,500 to £14,999: M&S Bank charges the cheapest rate on up to £15,000 at 2.8 per cent. TSB, Sainsbury’s Bank, John Lewis Finance and Zopa all charge 2.9 per cent.
Read our full round-up here.
The same amount borrowed with rival M&S Bank would cost just 36p more per month and a total of £13.07 over a three year term.
M&S Bank offers the same rate on a larger bracket of up to £25,000, plus it gives the option of a repayment terms of up to seven years (five to seven-year terms, however, come with higher interest of 10.9 per cent).
If you borrow between £1,000 and £2,999 it charges 20.9 per cent, amounts between £3,000 and £4,999 incur 16.9 per cent interest and £5,000 to £7,499 costs 3.6 per cent.
Amounts between £15,000 to £25,000 comes with interest of 5 per cent.
All loans are offered with repayment terms of between one and five years at the same rates.
High street giant: John Lewis Finance already offers a credit card, insurance and forex
How do I apply?
To apply you must have a UK bank account and earn more than £10,000 a year.
John Lewis Partnership Credit Card customers can use their account number to speed up their application.
Once you have signed the agreements, funds will be transferred typically within two working days.
The lender offers the option of a payment holiday, this will mean it takes longer to repay your loan but gives the option of skipping repayments for one month a year.
If you can settle your loan early John Lewis early without any extra interest or fees.
Lenders are allowed to charge up to 58 days interest on the remaining amount if you choose to repay your loan in full before the end of the term.
USE A SOFT SEARCH TOOL FIRST
As with all credit card and loan products, the best rates are reserved for those with the best credit scores.
Even those who are accepted may be offered a more expensive deal as only 51 per cent of successful applicants must be given the advertised rates.
It is therefore a good idea to use a soft search tool before you apply. These let you see what your chances are of getting accepted and what rate you are likely to be given without running a hard search of your credit score, which leaves a mark on your credit file.
Several lenders have their own, including John Lewis, as do some comparison sites including our carefully chosen partner service, MoneySupermarket.
top personal loans
2.9% for £7.5-£20k (Nectar card deal)
Over 3 years
2.9% for £7.5-£20k
Top rate available, repay over 5 years
5.3% for £3-5K
Best deal for small amounts
2.8% for £7.5k-£15k
Top rate, repay over 7 years
6.7% for £30-50k
Largest personal loan available,
John Lewis’ personal loans vs Partnership Credit Card
Depending on the reason for your loan, and how much you need to borrow it could be worth considering a credit card.
The top 0 per cent interest purchase credit card means you can spread the cost of repaying over up to 31 months.
There are some strict rules to follow though if you are considering this.
Firstly work out how much you need to repay each month to clear the balance before a 0 per cent deal ends, and then set up a direct debit for that amount and cut up the card so you can’t add more spending.
If you are a loyal John Lewis shopper you could consider its Partnership Credit Card.
It comes with nine months 0 per cent interest on purchases (22 months less than the leading deal from Sainsbury’s Bank) but it and allows you to clock up points for spending in Waitrose and John Lewis.
It also comes with 0 per cent interest on balance transfers for 18 months from account opening with a 2.9 per cent fee but you won’t earn any rewards for transfers and there are far better deals out there.
It’s also worth noting that John Lewis offers shoppers buying furniture from the retailer costing up to £25,000, interest free credit with no set up fee. The repayment term depends on the how much you borrow.
Purchases over £1,000 are offered 12 months interest fee, spend more than £3,000 and you are 24 months. It requires a 10 per cent deposit.
Loan payment calculator
This calculator shows what your monthly payments would be for a given loan, where interest is compounded monthly. Payment protection insurance is excluded.