Analysis of market data undertaken by Sainsbury’s Bank reveals that the cost of unsecured borrowing is at its lowest level in six years.

In 2007, the average best buy rate for an unsecured loan was 6.1%, rising as a result of unprecedented financial market conditions to a peak of 8.0% in April 2009. Since then, the average best buy rate for loans has steadily fallen, with the 2010 average of 7.7%, 2011 average of 6.7%, and 2012 average of 5.8%.

Currently, the best rate available on the market for an unsecured loan is 4.8%, 3.2 percentage points lower than the 8% best buy rate that was available in April 2009, when prices peaked.

A borrower taking a £10,000 best buy loan with a three year repayment period today would repay a total of £10,740.60. This is £494.28 less than their total borrowing costs would have been, had they taken their loan in 2009, when they would have paid a total repayment of £11,234.88.

Simon Ranson, head of banking at Sainsbury’s Bank, said: “In the current market, consumers have the opportunity to borrow at historic low rates. Someone taking a loan nowadays, be it for debt consolidation, home improvements or to pay for the purchase of a car for example, will pay several hundred pounds less than if they’d taken the loan a couple of years ago.

“People need to shop around before taking out a loan and make sure that they find a competitive rate as it could save them hundreds of pounds in lower repayments.”