Hitachi, best known for its electrical products, is to shake up the market for unsecured personal loans by undercutting high-street providers.
Hitachi Personal Finance has offered credit on purchases for some time, but it now keen to make an impression on the market for personal loans by offering competitive rates of 5.4% on lower loan amounts.
Currently, market-leading rates of 5% are offered by the Derbyshire Building Society and M&S Bank, while Sainsbury’s is offering 5.1% with a 0.1% discount for repayment within a shorter term. Peer-to-peer lender Zopa is also challenging high-street lenders, with a best deal of 5%.
But all of these rates are only available to customers wishing to borrow above £7,500.
In a break from this tradition, Hitachi is targeting the gap in the market for those who wish to borrow lower sums, offering loans at just 5.4% for lowest-risk customers on sums above £2,500.
For those wishing to borrow £7,500 or more, Hitachi is ready to undercut the competition here too, by offering rates of just 4.9%.
It’s a radical turnaround of almost 30% on the 6.8% APR it offered on sums above £7,500 at the turn of the year. Hitachi says it is here to stay and that the new rates reflect a recovery in the faith of consumer finance.
“The confidence in the consumer market is getting stronger,” said Hitachi Finance’s head of marketing, Theresa Lindsay.
“We have a sustainable product. We’re not going into the market with a lower offer that three days later goes higher.”
It will be hoped that a cheaper alternative for smaller personal loans will spur consumer spending, which remains cautious.
Figures from the Office of National Statistics (ONS) show that consumer spending only increased marginally in the first quarter of the year (0.1%), despite an upturn in economic growth of 0.3%.
James Booker
Which4U
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