Lenders pushing loan rates up
Loan prices have hit a seven year high after a rush of lenders increased rates on personal loans in the last month, Moneyfacts.co.uk has said.As a result borrowers are facing the highest levels of repayments seen in the past six years, according to the price comparison website.
"In the last few years the market for personal loans has been extremely competitive as lenders and borrowers alike cashed in on the availability of cheap credit. Increased competition pushed prices down and lenders continually undercut each other in order to top best buy tables," said Moneyfacts.co.uk analyst Michelle Slade.
"Since August 2006 the average rate on offer for a £5,000 loan over three years has increased by just under three per cent, from 8.1 per cent to 11 per cent today. With no real signs that conditions are going to get better in the near future, rates could get much higher yet."
She added that this is bad news for consumers who may be considering consolidating existing debts to try to drive down their monthly expenditure.
"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," she said.
"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."
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