Rise in loan costs due to PPI crackdown
October 9, 2008
According to a recent report the ongoing crackdown in relation to Payment Protection Insurance, or PPI, on loans has resulted in an increase in costs and interest rates for those taking out personal loans. Officials have said that lenders have been looking at other ways to make money on loans since being warned about mis-selling PPI by UK financial authorities, and therefore personal loans have become more expensive for consumers.
Another reason behind the hike in interest rates and costs on personal loans is that many lenders have been looking at ways to try and reduce the number of loans that they make since the onset of the global credit crunch, and one of the ways in which they have done this is through increasing the costs associated with taking out personal loans. Over recent months some lenders have increased their personal loan interest rates by around 1%.
Industry officials have warned that consumers could find that taking out a personal loan these days could be far more expensive than it was, say, twelve months ago, and consumers need to be careful that they do not end up paying over the odds on their borrowing. However, there are still some competitive personal loans around, and consumers are urged to compare the market to find the most suitable loan at the most competitive rate of interest.
In the meantime, UK financial authorities are continuing to look into the matter of mis-sold PPI, and many have said that the problem is still rife within the financial sector despite the ongoing crackdown, which has seen a number of companies receive hefty fines for breaching the more stringent regulations that have come into play recently.
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