John Lewis launch new Unsecured Loan product but am I likely to get accepted?

John Lewis the famous retailer, has launched a new unsecured loan product offering loans of between £1000-£25,000 with rates from as low as 2.9%

The most popular borrowing bracket of £7,500-£15,000, attracts the 2.9% rate which is actually just 0.1% about the market leading M&S Bank. Furthermore, there are no hidden costs and no redemption penalty should you be in a position to pay your loan of early. Lenders are allowed to charge 58 days interest on

Thus at the headline rate of  2.9% on a loan of between £7,500 and £14,999, a £10,000 loan repaid over three years would cost you £290.12 per month, or a total repaying of £10,444.43.

So how does this compare? For unsecured loans between £3,000-£4,999: 

Zopa comes out the most competitive at 5.3%, then Hitachi personal finance at 7.3% and finally Ikano Bank at a rate of 7.7%.

For the next tier of borrowing between £5,000 to £7,499:

The best deal is still offered by peer to peer lender Zopa at 3.3%, again Hitachi personal finance is second with 3.4%, with Yorkshire Bank, Clydesdale and M&S banks charging a 3.6% rate.

For larger loans between £7500-£14,999:

M&S charge the cheapest rates here at just 2.8%

M&S Bank also offers the same rates on larger unsecured loans up to £25,000, plus it gives the option of repayment terms up to 7 years (five to seven-year terms, however, come with higher interest of 10.9%).

If you use John Lewis and borrow between £1,000 and £2,999 it charges 20.9%, with amounts between £3,000 and £4,999 charged at 16.9% interest, and £5,000 to £7,499 attracts a rate of just 3.6%. Larger loans of £15,000-£25,000 come with a 5% interest rate.

All their unsecured loans are offered with repayment terms of between 1-5years at the same rates. To apply you must earn a minimum of £10,000 per year and have a UK bank account. The process is relatively quickly once all the agreements have been signed, funds will typically be transferred within 48 hours. The lender also offers ‘payment holidays’ of up to one month per year, meaning it will take longer to pay the loan back overall but may help your individual circumstances in the short term.

If you can settle your loan early John Lewis early without any extra interest or fees.

So are you likely to get accepted then? As with all credit card and unsecured loan products, the best rates are only really obtained by those with the best credit scores. Of those accepted only 51% of them will be offered the advertised rates anyway, with many being offered different deals.

Therefore it is often a good idea to use a ‘soft search’ tool before you apply. Such searches allow you to see how likely you are to be accepted and at what rate, without leaving a hard search mark on your credit file.  Several lenders have them on their websites, including John Lewis and comparison sites.

 




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