Borrowers seeking a medium-sized personal loan can now take advantage of rates as low as 5%. And, what's more, they have a whole half-decade over which to repay the debt.
We take a look at Derbyshire Building Society's new loan offering in closer detail and see how it stacks up against the wider market.
What's the deal?
Derbyshire Building Society offering customers looking to borrow between £7,500 and £15,000 a joint market-leading APR (annual percentage rate) of 5%, down from the previous still-competitive 5.1%.
This rate applies to loans that are taken out over a period of one to five years, with repayments remaining the same for the fixed term of the loan.
You can apply online for the loan and will receive an instant decision on whether you have been accepted. There are no hidden fees so you won't face a charge for setting it up.
Who's it good for?
The new rate is great news for anyone looking for medium-sized borrowing - for example, to fund home improvements, buy a new car or pay for a summer wedding. In this case, this lender could well be your best bet, enabling you to budget with fixed repayments over the loan term.
Any catches?
To apply for Derbyshire's loan you will also need to be aged at least 18, a UK resident for the full term of the loan and have a minimum (combined) income of £700 per month.
Also, bear in mind that while the quoted 5% is joint top of the tables, you may find this isn't the rate you actually get. The APR that's advertised is 'representative' which means it only has to be offered to 51% of successful applicants. Yours could be higher.
You'll also need a squeaky clean credit history to be accepted for loans with a market-leading rate. To check if yours has any blemishes, you might want to get a copy of your report before applying. You can see what's available from the different credit reference agencies and their services by visiting MoneySupermarket's credit reporting channel
If you find your score does need repairing, Melanie Wright's article gives you tips on how to start repairing your score.
What's the verdict?
If you need a medium-sized loan it could be worth getting your skates on and applying for this deal. Personal loan rates are currently at an all-time low, but it might not be that way forever.
But before applying, as well as checking your credit score, make sure you can afford the repayments.
There are other loans available at great rates, although they are on shorter fixed-term timeframes.
For example, Sainsbury's Bank's new 5% loan rate is also available on amounts of between £7,500 and £15,000 but only over a repayment period of between one and three years.
However, the deal is also only available to Nectar cardholders who have had their cards swiped in-store or used them on the Sainsbury' website within the last six months.
Another option is the Clydesdale Bank Personal Loan, which is available over up to five years, although the rate is slightly higher at 5.1%.
Top tip!
If you need access to a smaller amount of cash, there are still cheaper ways to borrow than personal loans. For example, you could pick from one of the best buy credit cards offering a 0% introductory period on balance transfers or purchases - or both.
This way, you can avoid paying any interest on your borrowing at all. For purchases, one of the best bets is the Tesco Clubcard Credit Card for Purchases which gives you 16 months at 0% before its representative APR of 16.9% (variable) kicks in.
However, if you need a loan to pay off existing card debts, the Barclaycard Platinum Credit Card with Extended Balance Transfer offers the longest with 26 months interest-free borrowing, though it's subject to a 3.5% fee. You can pay a lower 2.4% fee with the Barclaycard Platinum Credit card with Balance Transfers, but this will only provide 25 months interest-free.
However, remember to clear your balance during any 0% time period to avoid being hit with representative APR of 18.9% (variable).
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else. Contact MoneySupermarket.com at Moneysupermarket House, St David's Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2013.
Dismal savings rates mean that people are increasingly looking for alternative ways to generate decent returns - with peer-to-peer lending proving among the most popular options.
Peer-to-peer lending enables savers to lend money and achieve higher returns than if they deposited their money with a bank or building society. The system benefits borrowers too, as they get access to lower cost loans than they would if they borrowed through a bank (you can read more about this at the end of this article).
Peer-to-peer schemes have soared in popularity in recent months, with consumer loans made via the websites having just hit the £500m mark. Here, we take a closer look at how peer-to-peer lending works, as well as the potential returns and risks involved... .
All peer-to-peer lenders are not the same
If you choose to invest with a peer-to-peer lender in order to boost your savings returns, it pays to look carefully under the bonnet of the particular scheme you have chosen.
Different providers charge different fees and offer varying levels of protection, so don't assume they are all the same.
Alex Gowar, spokesman for one peer-to-peer lender, RateSetter.com, said: "The key piece of advice I'd give to someone who is considering peer-to-peer is to carefully reflect on the rate you can expect to earn. While contracts are fixed, rates of return can vary as they can be affected by bad debt and late payments. So when choosing a peer-to-peer operator, it makes sense to understand the risks and protections that are in place."
What sort of returns can I expect?
The returns you can generate from investing with a peer-to-peer lender will depend on how long you can afford to tie your money up for, as well as any charges which may be deducted and the risks involved.
For example, the average net return before tax across all investors lending for 180 days or more through Funding Circle, another peer-to-peer site, is 6.20%. This rate includes all earnings and is calculated after fees and bad debt. However, this isn't necessarily the actual rate you will get. This is because the returns you achieve will depend on the exact rates you choose to lend at, the risk grade of the businesses you lend to, and any losses you might experience. Businesses are graded A+ through to C, with A+ businesses being the lowest risk and C being the riskiest.
There is a 1% annual servicing fee and on average it take two days to access your money, which you can do by selling parts of your loan to other investors. If you sell a loan part, there is a 0.25% sale fee.
The minimum amount you can invest with Funding Circle is £20 and there is no maximum, so you can invest as much as you want.
Zopa, another major peer-to-peer lender, also charges an annual fee of 1% on the money you lend, and the rates shown on its website are inclusive of fees.
Similarly, with RateSetter, the rates shown are inclusive of fees, which are equivalent to 10% of the interest you receive.
If you are prepared to tie your money up for five years, then RateSetter's 5 Year Income account offers a return of 4.80% on your investment, repaid in equal monthly instalments, which can either be reinvested or taken as an income.
The minimum amount you can lend is £20, and there is no maximum. If you don't want to tie your money up for this long, RateSetter's 3 Year Income account pays 4.00% fixed, again inclusive of fees.
Alternatively, the RateSetter 1 Year Bond pays a fixed rate of 3.10% before tax - not bad when you consider the best 1-year fixed rate from a conventional savings provider is just 2.10% (annual equivalent rate) from Kent Reliance Building Society.
If you don't want to tie up your savings for a long period of time, then RateSetter offers a Monthly Access option, which only requires a short-term commitment of 30 days investing. You can earn 2.40% on your investment, and at the end of the month, you can roll your contract over or you can withdraw your funds.
How safe is your money?
Money invested with peer-to-peer lenders is not protected by the Financial Services Compensation Scheme, so there are definite risks involved in choosing to save with a peer-to-peer lender rather than a conventional savings provider.
However, peer-to-peer lenders do vet their borrowers very carefully, so your money is unlikely to be lent to anyone with less than an excellent credit rating. Funding Circle, for example, has very low annual bad debt rates of below 0.50%.
RateSetter claims it is unique in peer-to-peer lending as the only operator to have returned every penny of capital and interest to every single lender. It is able to do this because of its Provision Fund, which lenders contribute to via their 'credit rate'. If a payment is missed, then lenders can make a claim through the fund to ensure that that they don't lose out.
Zopa recently introduced a similar scheme to help protect savers. The 'Zopa Safeguard' is a fund held in trust by a not-for-profit organisation, which means Zopa has no rights to the money in it. So if a borrower you lend to through the site is then unable to pay back their loan, the Zopa Safeguard will step in and repay all the money you are owed.
Peer-to-peer lending benefits both borrowers and savers
As mentioned earlier, it's not just savers who can end up quids-in using peer-to-peer providers - borrowers can benefits from market-leading loan rates too. For example, Zopa has just slashed the rate on loans between £7,500 up to £10,000 to a miniscule annual percentage rate (APR) of 4.9%, the lowest rate ever on this size of loan.
Giles Andrews, CEO of Zopa, said: "By going under 5% this signals an exciting opportunity for us and future for the peer-to-peer industry as a mainstream option for borrowers looking for unsecured personal loans."
You can read more about the new loan in Laura Howard's article: Loan rates hit new all-time low of 4.9%. You'll need to hurry, however, if you want to take advantage of this deal, as it is only around until May 22.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
Almost one in six Brits are so worried about money and their financial futures that it's affecting their mental health, says new research from MoneySupermarket.
If money worries are causing you sleepless nights, you're clearly not alone. Our research found that 16million people find finances the most stressful aspect of their lives, while 15% say it's having a detrimental effect on their health.
The link between mental health and money is well established so, in an economy where the cost of living is rising while wages are stalling, the research is hardly surprising.
But there's loads of help out there for anyone feeling the strain, and MoneySupermarket has teamed up with mental health charity Mind to let people know they don't have to suffer alone.
Here's a quick look at the research along with some practical advice on what to do if you're feeling the strain and need help.
Anxiety and stress
Almost a fifth (18%) of those surveyed said their current financial situation was what caused them the most stress. A further 13% said their future financial situation was causing the most worry.
That means not far short of a third of us put anxieties about money of one sort or another at the top of our worry list.
What's worse is that a huge 72% thought their worries would only get worse this year, with 51% citing the rising cost of living as the main reason. One in 10 said the forthcoming changes to the benefits system were troubling them.
Young people appear to be feeling the strain most, with two-thirds of 18-34 year olds saying they're frequently or occasionally worried about money.
Clare Francis, editor-in-chief at MoneySupermarket, said: "While we have recently narrowly avoided a triple dip recession, the impact of the last five years has hit people's finances hard, and so it is not surprising that it is such a cause of anxiety and stress."
Get help today
The average household debt, including the mortgage, was £53,995 in March, according to national money education charity Credit Action. Excluding mortgages, the average debt was £5,980.
Trying to clear your debts can feel like an impossible task, but burying your head in the sand is the worst thing you can do. There's plenty of help out there and you don't have to pay a penny for it, so pick up the phone or log onto one of the following websites as soon as you can.
Mind also offers support for people facing mental health problems, whether they're caused by financial worries or anything else.
Paul Farmer, chief executive of Mind, said: "No one should have to face mental health problems alone and that's why we offer information and support to anyone who might be struggling with money matters."
You can find Mind online at www.mind.org.uk or call its advisors in confidence on 0300 123 3393. Calls are charged at local rates, but will cost more from a mobile phone.
The Citizens Advice Bureau (CAB) offers free, impartial and confidential advice on debt. Its staff receive specific training on mental health problems too, so you can talk to its advisors, in confidence, about your worries.
You can find the CAB online at www.adviceguide.org.uk or by making an appointment at your local branch, which you can search for online or in Yellow Pages.
StepChange, formerly the Consumer Credit Counselling Service, also offers free advice on problem debt, anonymously.
It works with the Mental Health Foundation and has carried out its own research into the link between debt and mental health. For example, it found 78% of those in debt say it's damaged their self-confidence.
You can find StepChange online at www.stepchange.org or you can call them for free, including from mobile phones, on 0800 138 1111.
Christians Against Poverty (CAP) specialises in helping people who are struggling emotionally with debt. CAP also does home visits and although its name implies a religious focus, the support is entirely non-religious.
You can find CAP online at www.capdebthelp.org or call its advisors for free on 0800 328 0006.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
