Unsecured loan cost still rising, figures show

Tue, 27 Jan 2009

The cost of unsecured loans continues to rise, with rates increasing by up to 3.4 per cent in 18 months in some cases, figures show.

Data released by Moneyfacts.co.uk, reveals that smaller personal loans have seen the biggest hike, with the average rate for a £5,000 loan standing at 12 per cent.

Anyone with a personal loan at this rate for a period of three years would end up paying £262.27 more in interest than someone with a deal at 8.6 per cent.

Michelle Slade, analyst at the website, said: "The Base rate may be at a historically low level, but anyone needing a personal loan has seen no benefit."

Stricter lending criteria mean that it is harder to get a personal loan and those that are accepted will be paying more than they would have done in the past.

Last week, uSwtich.com claimed that people who opt for a debt consolidation loan can save an average of £803.39 over five years by doing so.
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