Personal Loan Rates Up by 44 per cent

Mon, 11 May 2009

New figures from Moneyfacts.co.uk have revealed a 44 per cent increase in the average interest rate for a personal loan in the last two years. The findings reveal that those looking to borrow small sums have been hit the hardest, with individuals hoping to secure a loan of £5,000 faced with interest rates of 12.4 per cent on average. That figure is up by 8.6 per cent from May 2007. This sharp rise in interest rates has led to an increased prospect of borrowers finding themselves in debt, with an average repayment charge of nearly £200 per £1,000 when other costs are taken into account.

Market maker AAP claim that people are looking to find alternative ways to meet repayments, with an increase in the number of people disposing of endowment policies as they look to repay debts, which can include credit cards and personal loans . Furthermore, research from financial comparison website unbiased.co.uk reveals that more and more people are cutting back on their savings in order to meet repayments.

Analyst at Moneyfacts.co.uk, Michelle Slade, painted a grim picture of the prospects of borrowers being able to find better loan rates, despite the Bank of England reducing interest rates to an all time low.
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