An Post launch loan to rival market rates

A NEW low-rate personal loan from An Post aims to undercut the main banks’ offerings by several percentage points. One Direct, the profitable financial wing of An Post is introducing a new personal loan with an annualised percentage rate (APR) of 7.75%.

One Direct also released details of a survey yesterday which found Irish borrowers primarily borrow for pleasure with home improvements, car purchases and holidays the main benefits reaped by loans.

The low-rate loan applies to borrowings of between 1,000 and 20,000 over one to five years. The next cheapest loans on the market come from PermanentTSB which charges 7.9% APR for a 15,000 loan over five years or 8.9% over three years. Bank of Ireland charges between 9.9% and 12.3% APR on loans of the same amount while NIB’s personal loans incur between 8.1% and 13.6% APR.

The main ECB refinancing rate is at an all time loan of 2.5% and Irish institutions have been criticised for not passing on the full amount of recent rate cuts to borrowers.

Finance for the One Direct loans is coming from GE Capital Woodchester following the ending of a similar arrangement with Bank of Scotland (Ireland).

A spokeswoman for One Direct would not disclose details of the deal between An Post and GE Capital Woodchester yesterday.

Borrowers do not have to be previous customers of One Direct but must have a good credit history and earn a minimum income of 16,500 per year or 320 per week. One Direct managing director Tim McCarthy said the personal loan market was a huge market and had scope for much greater competition in a climate of historically low interest rates. “Total outstanding unsecured loans in Ireland are in excess of 11.5 billion.”

Mr McCarthy said the new partnership allows us to challenge the status quo and remind people to shop around for the best rate available when they are borrowing money.