Is Sainsbury's personal loan guarantee a gimmick?Loan price guarantee could damage your credit file

08 May 2012

Sainsbury's Bank ATM

Sainsbury’s Bank has launched a 'price promise guarantee' on its personal loans. But beware - you could damage your credit file.

Sainsbury's Bank regularly appears at the top of our Best Rate personal loans tables. But is its new guarantee a gimmick too far? The Which? experts put it to the test.

How does the personal loan guarantee work?

The personal loan guarantee is available if you successfully apply for a Sainsbury’s standard loan. If you find a better deal elsewhere and put in a claim within 28 days of your Sainsbury's loan being approved, Sainsbury’s Bank will reduce the APR on its loan to 0.1% below that of the alternative lender.

You can't put in a claim if you've already signed and returned the Sainsbury's loan agreement, so the only time you can claim is between being accepted for the Sainsbury's loan and returning the signed loan agreement. Just finding a better loan deal elsewhere isn't enough - you have to be offered it in writing.

Sainsbury's personal loan offer: a good deal or a gimmick?

Which? expert Martyn Saville commented: 'Sainsbury's Bank already offers one of the best personal loan deals on the market. It doesn't need to resort to gimmicks like this loan guarantee.

'How many people would apply and be accepted for a personal loan, and only then shop around for a better deal? Once you've applied for the Sainsbury's Bank loan it will show up on your credit file. If you then apply to another bank to see if it will beat the rate offered by Sainsbury's, it will check your credit history and see that you've just applied for another big loan with Sainsbury's. It's then highly likely that this second lender will either reject your application or offer you a higher APR than you might otherwise have been offered.

'Either way, the Sainsbury's deal feels like a gimmick that will rarely have to pay out. And worse still, if you apply to one or more other lenders to see if they'll beat the Sainsbury's rate, you could cause long-term damage to your credit file as a number of applications in a short period of time will make you look desperate for cash.'

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