Loan Interest Rates On The Rise

Wed, 20 Aug 2008

Personal loan rates have reached seven-year highs as lenders continue to tighten their belts and pass the cost of higher risks onto their customers, new research has found.

According to price comparison website Moneyfacts.co.uk, the average rate available on a loan of £5,000 over a three year term has risen from 8.1 per cent to 11 per cent over the last two years - the highest level unsecured loan rates have been since 2001.

Meanwhile, the cheapest rate available for loans of the same sum has increased from 6.3 per cent to 7.6 per cent.

Michelle Slade, an analyst at the finance site, said that the personal loans market has been very competitive in recent years as lenders and borrowers alike cashed in on the availability of cheap credit .

As a result of the increased competition, prices have been pushed down as "lenders continue undercutting one other in order to top best buy tables".

But Ms Slade warned borrowers that rates could "get much higher" in months to come and said it was "extremely bad news" for borrowers hoping to consolidate existing debts .

'At a time when every penny counts, if you need a personal loan, you need to make sure that you shop around as it is highly unlikely your bank will offer the best deal ."

"Currently on a £5,000 loan there is a difference between the cheapest and most expensive loan of £25.55 per month, which equates to £919.80 more over three years, she added."
add to favouritesnewsletterlink to this pagesend to friendpost comments

Link to this page

Copy and Paste the following HTML into your page.

Credit Crunch Savers
HSA Dental Plan
Get covered from £7.70 per month!
Amex Cash Back
Credit Card
Get 5% cash back on purchases with Amex
Income Protection Insurance
Get an instant quote with the award winning company