Nationwide fixes it for cheapest rates

The Nationwide building society has slashed its unsecured personal loan rate from 8.9%APR to 7.9%APR, offering what it claims is the cheapest loan on the high street.

It applies to all loans between £1,000 and £15,000 and is part of Nationwide's "one rate for all" approach to its personal loans. It is fixed, with no fees or additional charges - including early settlement - and repayments start from one year up to seven years.

The rate puts it clearly ahead of the big four banks. Barclays is currently charging 15.9%APR for personal loans of £5,000 over three years, which means the total cost is £6,237.36, compared to Nationwide's £5,609.52 - £627.84 more.

For small loans of £2,000 over four years, NatWest is charging 13%APR more than Nationwide on its personal loans at a rate of 20.9%APR. A £2,000 loan with NatWest would end up costing £2,877.12, compared with Nationwide's £2,327.04 - an increase of £550.08.

However, Nationwide's loan rate is not the very lowest. It is beaten by Lombard Direct, which has an APR of 7%, and Northern Rock, at 7.8%. It is also behind Abbey National's 7.1%.

But, in the case of both Lombard and Abbey, these rates are only available to borrowers who meet certain credit rating standards.

It has been a week of cuts for Nationwide. The introductory rate on its credit card was cut this week from 3.5%APR to 0%APR for six months. Its standard rate also falls from 14.6%APR to 13.9%APR, in line with the rate offered by internet bank Egg. The cheapest standard rate credit card is 8% offered by online bank Cahoot, part of Abbey National.