Personal loan rates on the increase

Wed, 16 Dec 2009

Consumers looking for a personal loan are being hit with higher rates, according to new research.

Moneysupermarket.com has found that the current average rate out of the top ten £5,000 personal loans is 10.78 per cent, up 1.54 per cent since January.

The number of people searching for a personal loan has also increased by 20 per cent in the same period, despite the rise in interest rate and the amount of lending decreasing by 28 per cent.

According to the website, this has led to a discrepancy between supply and demand of the loans .

Tim Moss, head of loans and debt at moneysupermarket.com, said: "The financial crisis may have eased but this hasn't filtered through to the personal loan market yet. Luckily there are players who are filling the void … the likes of A&L, Tesco, Sainsburys and the Post Office ."

The Bank of England recently found that consumers in the UK may be paying off their personal loans but are increasing debt owed on credit cards, causing concern that some are moving their owings around.
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