Lack of trust in the financial sector and the quality of the products on offer are leading to an increase in supermarket lending, an expert has said.
Head of personal finance at lovemoney.com Ed Bowsher noted that services provided by supermarkets such as Tesco are becoming increasingly popular among borrowers, with the food conglomerate admitting to seeing a “double digit growth” in its loans, credit card and savings business in the last 12 months.
“[Distrust] is an issue,” he said of this, remarking that many banks are currently “in a very weak situation”, allowing businesses like Sainsbury’s and Tesco to become more competitive.
“At the moment, Sainsbury’s are offering a personal loan at 7.9 per cent for some customers – that’s as good as you can get,” he added.
Mr Bowsher’s comments follow a statement from Sainsbury’s Finance, which announced that the company is launching a new scheme to reward shoppers for purchasing is financial services products.
By Sarah Adie