A price promise press release has just dropped into my inbox from Sainsbury’s Personal Finance. It’s on shaky ground with me, as I’m no fan of this type of marketing hype where companies promise to reduce prices in the unlikely event that having signed up, you search elsewhere and find it cheaper (see my Price promises aren’t worth the paper they’re written on blog).
Here’s an edited down version of the release…
SAINSBURY’S OFFERS PERSONAL LOAN PRICE PROMISE GUARANTEE
Sainsbury’s Bank is offering a Price Promise Guarantee whereby if any customer successfully applies for its standard personal loan but secures a better rate elsewhere with another provider, the supermarket bank will beat it.
Sainsbury’s Bank already offers one of the most attractive personal loan rates in the market at 6.1% APR representative for loans of between £7,500 and £15,000. The Price Promise Guarantee* applies to all Standard loans from £1,000 to £25,000."
My first title for this blog was ‘Sainsbury’s launches meaningless price promise’, as to find another loan cheaper afterwards, you’d need to apply elsewhere. But each application you make for a loan hits your credit score and can thus be a big negative.
Yet having thought it through, I’ve made it ‘mostly meaningless’ as I can see a tiny window of advantage for this promise.
While Sainsbury’s is at some amounts, one of the market’s cheapest (see Cheap Loans for full best buys), like all lenders its APR is "representative rate", meaning only 51% of accepted applicants get the headline rate offered. The rest can be charged more and people are often shocked having applied to a cheap lender to receive double-digit APR offers.
However, it can take up to a week for them to tell you – and that’s the slight window. If Sainsbury’s accepts you, but not at the cheapest rate and another lender gives you a lower deal, this way you could undercut Sainsbury’s by 0.1%. Then again, it’s bad practice to apply to two lenders for one application anyway due to the credit impact – so MoneySavers shouldn’t be doing this.
Plus, Sainsbury’s terms state: "Claims cannot be accepted if the customer has already fully accepted the Sainsbury’s Standard Loan offer by signing and returning the Sainsbury’s Loan agreement."
So if you have applied elsewhere as well as Sainsbury, it’s best not to sign up fully until you get a final response from elsewhere.
As I say…mostly meaningless.