Interest rates on personal loans have been rocketing
March 31, 2008
According to a recent report the interest rates on personal loans in the UK have been rocketing over recent months, with consumers now having to pay significantly more for some loans than they would have paid a year ago, despite the fact that the base rate is now at the same level as it was a year ago due to recent rate cuts in December and February. Those taking smaller loans of around £1000 to £3000 are going to be hardest hit, as these are the loans that have seen the most significant rises.
Based on a repayment period of three years a loan of £1000 will cost around 1.6% more than in January of this year, showing how rates have gone up in the space of just a couple of months even though interest rates have come down in this time. The news is better for those looking to borrow larger sums, such as £20,000, as the interest rates on larger loans have actually come down slightly, although only by a small amount.
Compared to one year ago, however, interest rates have gone up on all loans, so consumers will definitely be bearing the financial consequences of the global credit crunch, which has seen a wide range of lender putting up the cost of borrowing on everything from mortgages and personal loans to credit cards. Some personal loans of around two or three thousand pounds have gone up by around 4% compared to last year, and even the larger loans have gone up by around 1% according to recent figures.
According to one industry official: ‘The ongoing credit crisis has seen institutions concentrating on getting money in the door and becoming more expensive and selective when lending money out.’
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- Personal loan rate cuts from Barclays Over recent weeks a number of high street lenders have hiked up the interest rates on their unsecured personal loans, some by a whopping 4%, which has made borrowing far more expensive for consumers looking
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