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John Lewis partners with Zopa to offer personal loans: how do their rates compare?
Borrowers can apply for loans of up to £35,000 over seven years
John Lewis has teamed up with Zopa Bank to offer personal loans of up to £35,000, which can be used for big expenses such as home improvements, holidays, weddings or purchasing a new car.
Borrowers can apply for loans lasting between one and seven years with a representative APR of 9.9%, and get a personalised quote online within three minutes.
Read on to find out how these new loans compare on rates, and for advice on alternative ways to borrow.
Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of a personal loan provider before committing to any financial products.
John Lewis to offer personal loans
Through its banking arm John Lewis Money, the retailer already offers credit cards, insurance and travel money. Now, customers can also apply for personal loans directly on the John Lewis Money website.
These loans will be underwritten and serviced by Zopa Bank. Since launching in 2020, Zopa Bank has gained over a million customers for products such as personal loans, credit cards and car finance, and it plans to roll out a current account next year.
To get started, Zopa will first carry out a soft credit check to give you a personalised rate. This won't impact your credit score. If you proceed with the full application, a hard credit check will be done, which will impact your score. You may also need to submit proof of identification, income or bank account information.
Once the application is approved, Zopa says most applicants will receive their funds within a few hours.
- Find out more: personal loans explained
Who can get a John Lewis/Zopa personal loan?
To be eligible for a personal loan, you’ll need to meet some key requirements:
- be at least 20 years old and a UK resident with one year of address history
- be employed, self-employed or retired with a pension, and have an annual income of at least £12,000 before tax
- have a credit history that Zopa can access and a reliable record of repaying debt (such as utility bills or credit cards)
- be able to afford the loan based on your income and outgoings.
Zopa Bank doesn't offer joint applications or guarantor loans (when an additional person is named on the loan agreement and is also responsible for the repayments).
- Find out more: Nationwide doubles maximum personal loan
How much would it cost to borrow £10,000?
Loans are available from £1,000 to £35,000. The representative APR is 9.9%, but you might not get this rate.
In fact, providers only have to offer their typical loan rate to at least 51% of borrowers who apply. So if you have a low credit score, you might be charged a higher rate. You'll be told the rate you'll get before you submit a full application.
We’ve crunched the numbers to see how much it would cost to borrow £10,000 across one to seven years (the maximum loan term).
| Loan term | Representative APR | Monthly repayment | Total amount repayable |
|---|---|---|---|
| One year | 9.9% | £877 | £10,521 |
| Two years | 9.9% | £459 | £11,017 |
| Three years | 9.9% | £320 | £11,528 |
| Four years | 9.9% | £251 | £12,054 |
| Five years | 9.9% | £209 | £12,594 |
| Six years | 9.9% | £182 | £13,150 |
| Seven years | 9.9% | £163 | £13,719 |
Source: Moneyfacts
As you can see, borrowing for longer reduces the monthly payment you will have to hand over. However, it also means the interest adds up and you end up repaying much more than what you originally borrowed.
It’s also worth noting that Zopa charges an early repayment fee which is calculated based on your loan term. If your loan term is 12 months or less, the early repayment charge will be equal to the amount of interest that would've been applied to your loan over a period of 28 days. If it's over 12 months, it'll be one month and 28 days' worth of interest.
How the rates compare
To see how these new loans stack up, we checked current rates for borrowing £5,000 and £10,000.
Right now, the lowest rate on a £5,000 loan over three years is 7.2%, available from Santander and Tesco Bank (Clubcard holders only).
For £10,000 over five years, Tesco Bank leads with a rate of 6.1% for Clubcard holders.
Loan rates and eligibility vary, so you should always shop around before committing.
- Find out more: best personal loan rates
Is a personal loan the best way to borrow?
For some borrowers, a 0% credit card might be more suitable than a personal loan.
With an interest-free credit card, you don't have to commit to anything higher than the minimum repayment each month. It's also a form of 'revolving credit', so what you pay back you can spend again.
The top 0% purchase credit cards offer up to 21 months interest-free, while even the best loans incur interest.
If you choose a 0% card, it's really important to have a plan to repay the borrowing during the interest-free period, as these cards tend to have high rates once interest kicks in.
If you need a larger sum, borrowing more when remortgaging your home could offer lower rates and allow you to spread repayments over a much longer period.
However, it’s essential to consider that while extending your repayment period can lower monthly payments, it also significantly increases the total interest paid over time.
For more information, we’ve got all the details you need in our guide to how to remortgage to release cash from your home, and the best mortgage rates.
- Find out more: best credit card deals October 2024
