Interest rates on personal loans continue to rise
Despite the two most recent Bank of England interest rate cuts the interest charged on personal loans in the UK is continuing to rise, leaving many potential borrowers facing huge costs relating to their borrowing, The rates on personal loans have been rising for some time, and as a result of the credit crunch many people now find it difficult to get affordable unsecured personal loans, with banks having to increase their rates to make up for the losses incurred as a result of higher inter-bank lending costs.
The cost of borrowing £1000 over a three year period has gone up by 1.6% since January, and those looking to borrow smaller sums such as this can expect to have to pay more interest. However, those borrowing larger sums of money, such as £20,000 may be able to benefit from a slightly lower interest rate compared to that in January, although rates on these loans have increased compared to one year ago.
One loans of two or three thousand pounds consumers will be paying around 4% more than they would have been a year ago, and the rates on larger loans of around £20,000 have also gone up since last year, although the rise of around 1% is slightly less than on smaller sums. Although there are still some competitive deals available on loans many of these are reserved for those with excellent credit according to industry officials.
One industry expert said: ‘The ongoing credit crisis has seen institutions concentrating on getting money in the door and becoming more expensive and selective when lending money out.’
Recent additions:
- Loans market still suffering due to credit crunch
- Avoiding risks with an unsecured personal loan
- Keeping up with your secured loan repayments
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