Personal Loan Rates Soaring Due To Financial Markets Turmoil

Mon, 06 Oct 2008

Repayment rates on personal loans have increased by as much as 9 per cent in the last 28 days, according to new research from uSwitch.

The study by the price comparison website found that eight UK lenders have hiked rates on personal loans since the start of September including Bradford and Bingley, Lloyds TSB and Marks and Spencer, all of which have upped their rates by one per cent.

However, the most dramatic increases have been introduced by Black Horse (part of the Lloyds TSB group) and Bank of Ireland, which have put up the cost of their products by 9 per cent and 8.9 per cent respectively.

In repayment terms, this means a customer borrowing £2,000 over two years will pay an additional £225.22, or 35per cent, in interest to service the rate hike.

Other personal loan rate rises have been carried out by Barclaycard, Asda and Sainsburys, according to the study, while the total number of loans available has dropped from 56 to 52.

Louise Bond, personal finance manager at uSwitch, said: "As the news agenda overflows with the global financial meltdown, a plethora of loan rate increases have been implemented in the past four weeks."

"Lenders have increased unsecured personal loans by as much as nine per cent making borrowing even more costly for consumers," she added.
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