No more low-rate personal loans, expert claims

Wed, 02 Jul 2008

Low-rate personal loans are a thing of the past, it has been claimed.

According to Michelle Slade, analyst at Moneyfacts.co.uk, the decision by Yourpersonalloan.co.uk to increase its interest rates from 6.9 per cent to 7.3 per cent means there are no longer any sub-seven per cent personal loans available.

She said: "Back in June 2006 rates as low as 5.6 per cent were on offer and even this time last year rates as low as 6.1 per cent could be found.

"Today the lowest rate on offer is from the AA on its telephone loan at 7.2 per cent."

This is because personal loan firms are facing the same issues as mortgage lenders in raising funds and so are passing on the extra cost to consumers, Ms Slade explained.

Despite this, the demand for personal loans will increase as people look to consolidate debt, she added.

Meanwhile, the government has announced plans to make it easier for people to borrow money from credit unions in an attempt to reduce any potential credit problems .
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