Tesco takes on banks with cheap loans

TESCO has started an interest rate price war with AIB and Bank of Ireland by offering fixed rate loans of between €2,500 to €30,000 at lower rates than those offered by the main banks.

Tesco claimed yesterday that a recent survey shows that its typical fixed loan rate of 7.9% is competitive and can save customers more than €700 over the 48-month life of a typical €8,000 loan. Tesco has already piloted the scheme in 10 of its 86 stores in Ireland and is now targeting the estimated one million customers a week who used Tesco stores in a significant challenge to the main banks.

A spokesperson for the Irish Bankers Federation said the expansion by Tesco of its consumer credit services was further evidence of the growing level of competition and new entrants to the Irish financial services sector.