Steep rise in unsecured personal loan rates
by Gill Montia
Story link: Steep rise in unsecured personal loan rates
Latest figures from Moneyfacts.co.uk, the independent financial website, show that interest rates for unsecured personal loans are rising steeply, with nine of the providers in the Moneyfacts survey increasing rates by up to 4% for some borrowers.
Interest rates on unsecured personal loans have been rising steadily over the past nine months but only 4 months ago rates of less than 6% were available; today rates start at around 6.9%.
The uncertainty in the financial markets, increasing levels of bad debt and rising interest rates have left lenders keen to improve their margins, to reflect the current level of risk.
Taking a £5,000 loan over 36 months, Bradford & Bingley has raised monthly repayments by £8.07, giving a total increase over the life of the loan of £290.52.
On the same loan, Derbyshire Building Society has increased monthly repayments by £7.52 (£270.72) and Cheshire Building Society by £7.09 (£255.24).
Eskimo Loans, Masterloan, Northern Rock and Norwich & Peterborough Building Society have also raised their levels, but to a lesser extent.
According to Lisa Taylor of Moneyfacts, for consumers seeking short-term borrowing a personal loan is not necessarily the best method for refinancing or making purchases on credit.
She points out that “There are still some great 0% deals to be found in the credit card market, with up to 15 months 0% on purchases and balance transfers”.
Those with longer-term needs should consider a life of balance credit card agreement, such as Citi platinum, which offers 4.9% APR until the balance is repaid.
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