Loan signing: Get away to cheer the boys in green
Whether it's for a trip to the Euros or something more sensible, there are plenty of good deals, writes John Cradden
Published 03/02/2016 | 02:30
If you're feeling financially confident enough to knock on the doors of your local bank, building society or credit union for a personal loan, the good news is that competition in this sector has grown.
Mind you, taking up AIB on its controversial offer of a €30,000 loan so you can see Ireland play in the Euro soccer championships this summer in France might be too far in the direction of irrational exuberance, particularly since the interest rate on the loan is on the high side, at 10pc. (Experts also questioned whether it would really cost that much, even for a family, to support the boys in green.)
But if the loan is for something a little more sensible, like a car, home improvements or a family holiday, rates have come down since KBC started offering a (fixed-only) discounted rate of 8.9pc APR for loans up to €20,000.
This loan was specifically for home improvements, with its standard rate still around 10.5pc (for current account customers only). Permanent TSB also joined the fray with an 8.2pc rate for home improvement loans. The loan amount must be at least €10,000 but can go right up to €75,000.
However, the Bank of Ireland trumped both of them when it offered a general-purpose personal loan at the market-leading rate of 7.5pc APR for loans ranging from €300 up to €65,000.
"The introduction of the Bank of Ireland 7.5pc loan really does show that the banks are interested in lending now, and not just to mortgage customers," said Simon Moynihan of price comparison site Bonkers.ie. "The loan is the cheapest unsecured loan in the marketplace, and also offers customers the opportunity to defer payments for the first three months, a feature we haven't seen for some time."
Bank of Ireland's product remains the most competitive personal loan rate whether its for general purposes or specific ones, although Ulster Bank offers a loan at a discounted 6.9pc fixed rate for uFirst current account customers. This is a usefully cheaper margin if you are seeking a loan of more than €20,000.
If you have some cash already in the bank, it's worth considering Permanent TSB's 'cash-secured' loan at 6.4pc APR (variable). This loan is a bit like a loan from a credit union in that the bank will use your savings as security for any borrowings. So you can get a loan of say, €10,000 at a rate of 6.4pc APR as long as you have €10,000 in a PTSB savings account - a discount of over 6pc on its standard rate for a loan of this size.
But even if you have less than that in savings, you can still get a discounted rate. So if you have €5,000, you'll be entitled to a 7.5pc APR rate on a loan of €10,000, and 8pc if you have €2,500.
Credit union loans are also worth checking out, too. The Irish League of Credit Unions has been advertising heavily on personal loans on behalf of its members.
The average standard loan interest rate across its member institutions is 10.47pc, but they offer competitive rates for specific-purpose loans, with an 7.51pc average rate for car loans, a 7.25pc average rate for home improvement loans and a 6.55pc average rate for education loans.
Of course, you need to be a member to avail of these rates, but some credit unions will ask that you save with them for just three months before you can be considered for a loan.
Unlike the mortgage market, there is not much in the way of 'sweeteners' or freebies, but AIB offers a free BER (Building Energy Rating) voucher for customers who take out a new home improvement loan (interest rate 9.99pc APR) which, given that a BER assessment can cost up to €300, is not bad. But like the mortgage market, there are signs of increasing flexibility about repayments.
On some loans, such as Bank of Ireland's, the first payment can be deferred for up to three months. However, by doing this you will pay more than if you paid over the standard term.
With AIB you can choose interest-only repayments or planned repayment holidays, while Permanent TSB also offers flexible repayment schedules.
If you want the option of paying off the loan faster, this is generally easier if the loan is variable rather than fixed, but this doesn't always apply.
You can view some personal loan rates through the financial product comparisons section of the CCPC website Consumerhelp.ie, but bear in mind that it only compares standard loans and not those offered for particular purposes, such as home improvement or cars, nor does it highlight any special offers.
You can, however, see some of these cheaper, specific-purpose loans if you check out sites like Bonkers.ie. If you're looking for a car loan, check out the bank's websites as these tend not to show up on price comparison sites.
PTSB also offers discounted rates for car loans, which may well appeal to those who dislike the idea of financing a new set of wheels using a hire purchase-type deal or a PCP (personal contract plan) where you don't own the car until you make a final 'balloon' payment.
These loans are structured so that the rate is lower the newer the car is. The (variable) rates range from 8.8pc APR on €10,000 repayable over five years as long as the car is new or less than two years old, to 10.4pc APR if the car has a 08 reg.