Friday 20 April 2018

Personal loans - some of the best deals


John Cradden

If you haven't considered a personal loan for some time because you were more focused on either saving or paying down debt, you may have been willfully ignoring the advertising blitz for these products that banks here have been running over the past year.

But are you missing out on good deals for secured or unsecured personal loans?

"It is only this year that we have seen banks actively promote personal loans," says Simon Moynihan of price comparison site, while the Competition and Consumer Protection Commission decided to commission a survey on loans (see panel) earlier this year on the back of the increased level of advertising.

"There's been an awful lot of advertising by the banks for personal loans at the moment, and it occurred to us that given the recession over the last few years very many people have probably never taken out a personal loan before as their circumstances wouldn't have allowed them," said Fergal O'Leary, CCPC's director of communications and consumer help.

Up until a few months ago, the most competitive rates for loans were ones for specific purposes. So if your car badly needs replacing or you need to extend your house to cater for a growing family or your eldest was about to start college, there are still some attractive fixed and variable rate loans for these particular purposes.

Most of the best rates are for home improvement loans. KBC was one of the first movers in this space, and offers a (fixed-only) discounted rate of 8.9pc APR for such loans up to €20,000, falling to 8.5pc APR for loans over this amount.

Permanent TSB has since bettered that with a 8.2pc APR for its own home improvement loan, The loan amount must be at least €10,000 but can go right up to €75,000.

But the Bank of Ireland has upped the game recently by offering 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 Mr Moynihan. "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."

BoI also offers a home improvement loan for 9.0pc APR but unlike the other product, you can repay back this loan over seven years rather than five.

You can view some personal loan rates through the financial product comparisons section of the CCPC website, but bear in mind that it only compares standard loans and not those offered for particular purposes, such as home improvement.

You can, however, see some of these cheaper, specific-purpose loans if you check out price comparison

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 those increasing popular PCPs (personal contract plans) where you don't own the car until you make a final 'balloon' payment.

The interesting feature of this loan is that the rate rises the older the car being purchased is. So the (variable) rates range from 8.8pc APR on a €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 2008 or 2009 registration.

AIB has a range of options specifically geared to both students and their parents to finance the cost of the contribution charge and living expenses while at college. For instance, you can borrow up to €3,000 a year for four years at a discounted standard rate of 8.45pc APR.

But the cheapest personal loan rate of all is courtesy of Permanent TSB's 'cash-secured' loan at 6.4pc APR (variable) - but it does come with a few conditions.

In a nutshell, the cash-secured 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 your savings account, 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.

If you're inclined to stay loyal to your current bank, do check out how much of a discount you might be entitled to over standard rates. Ulster Bank, for instance, offers a 1pc discount to its current account customers, while KBC offers a 2pc discount. This is just as well, as their standard rates are not particularly competitive.

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 9.99pcAPR) which, given that a BER assessment can cost up to €300, is not bad.

Irish Independent

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