With the personal loan market struggling as the credit crunch takes hold, most lenders are increasing interest rates, tightening up on who they will lend to and withdrawing offers from the market.

Borrowers looking for a good value loan have increasingly limited options, so a new player in the personal loan market is to be welcomed by many borrowers who are looking for new borrowing options.

Sainsbury's Finance, a division of the giant supermarket chain which sells financial products, has plunged into the loans market with a personal loan offer exclusive to nectar card holders.

Those with a nectar card, the loyalty card where customers are rewarded for shopping at Sainsbury's and a few other shops, can make loan applications online for a loan of between £5,000 and £15,000.

They will have a typical APR of just 7.9 per cent, lower than their loans available to non nectar card holders and repayable over one to seven years.

The announcement comes following a previous announcement by Nationwide that they are cutting their personal loan rate, suggesting that some measure of competitiveness has returned to the personal loans market.

Steven Baillie, head of loans at Sainsbury's Finance said of the offer: “We’re constantly looking for ways to reward our customers and with this offer, we’re giving the Sainsbury’s shopper a preferential rate, enabling even more people to enjoy the benefit of banking, as well as shopping with us.’

Baillie added ”All of our loans customers enjoy one of the most competitive rates available in the market, but those shopping at Sainsbury’s can now take advantage of an even better deal.’

Sainsbury's says that the offer is one of the best on the market at the moment and one of only four similar products which offers an interest rate of under eight per cent.

Applicants can fill out the application form online and have a decision made instantly and the money transferred to their account within 24 hours of applying.

Mr Baillie added that customers could use the credit crunch to their advantage by haggling with retailers over prices for major purchases such as cars and houses.

He lamented that many British people still feel awkward arguing over price and talking about money and as a result are missing out on the best deals.

“The car industry is facing a very difficult time, with sales of new cars in February for example down 22% on a year ago. This means that now is one of the best times ever to negotiate a significant discount on the price of a new vehicle. It’s a real shame some people still don't feel confident in doing so,” he said.

Haggling over the price of the car and getting additional extras thrown in could be of long term benefit, as paying less for a new car means taking out a smaller loan and consequently paying less in interest.

For those watching the pennies during the economic downturn, now could be the time to find the confidence to test out those haggling skills and really get your monies worth.