Personal loan rates nudge up
by Gill Montia
Story link: Personal loan rates nudge up
Latest research from uSwitch confirms that unsecured lending rates are continuing to rise.
The comparison website reports that seven providers hiked rates by 1% for new customers in the past four weeks, taking the average rate to 9.07%.
According to uSwitch, a rise of 1% increases the amount of interest due on a five year £10,000 loan by £88 (to £2,371) which is particularly bad news for those wanting to use a personal loan as a means of consolidating existing debt.
The website estimates that last year, around 1.3 million Britons tried to make their financial commitments more manageable using this method.
uSwitch personal finance expert, Louise Bond, comments: “Hiking loan rates in the current climate is just making an already difficult situation practically impossible for consumers.”
She adds: “At the moment, loyalty really is king and many consumers could find a preferential loan rate with their existing provider. It’s definitely worth finding out what they can offer you before you search the rest of the market.”
Last week, the Finance and Leasing Association (FLA), which represents the UK’s unsecured lenders, reported that the value of unsecured loans granted in April dropped 45% year-on-year.
The body blamed the collapse on new consumer credit regulation (both from Brussels and in the UK) and the continued freeze in the wholesale lending markets.
The FLA sees both as putting extra pressure on lenders just when they are being called upon to help reinvigorate the economy.