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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Nov 9, 2012

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In the lead up to the costly Christmas season, two lenders are battling each other for customers by offering small personal loans.

Marks & Spencer, a luxury retail store in the UK with its own financial division, announced it will be offering small personal loans for up to five years in amounts from £7,500 ($12,000) to £15,000 ($24,000) at 5.5 percent interest, according to This Is Money. M&S normally offers standard sized personal loans of £15,000 or higher with interest rates of 9.9 percent. Hoping to entice more borrowers, M&S does not require new applicants to have previous financing with the retail store.

In response to this, Derbyshire Building Society, a large credit union-like company, will match its competitor by also offering 5.5 percent interest on small personal financing. Only the best qualified customers will receive a 5.5 percent interest rate on their personal loans.

A spokeswoman for M&S says that the lender hopes to receive a large number of applicants.

“We’re conscious of the need to reduce the cost of borrowing for our customers, so we’re constantly reviewing our rates to ensure we’re offering the best deal we can, and are pleased to be able to offer our lowest ever personal loan rate this winter,” said M&S CEO Colin Kersley in an interview with This Is Money.

M&S has never offered small personal loans as low as 5.5 percent interest.

“It is not the first time M&S Bank has set the trend for rate cuts. It will not be surprising to see loans of this nature hit the 5 percent mark before long,” said Rachel Springall, finance expert for Moneyfacts, in an interview with the Telegraph.

One year ago, during the Christmas season, Nationwide held the distinction of having the lowest interest rate of 6.2 percent in the UK.

Despite the efforts of M&S and Derbyshire, the British Bankers’ Association believes that customer demand for financing is weak due to the uncertain economy, even as Christmas approaches.

It remains to be seen if either M&S or Derbyshire will be able to gather borrowers and shoppers using their new small personal loan products in sufficient enough numbers to make profits in the costly Christmas season.