Personal loans more expensive, expert claims

Fri, 28 Mar 2008

Interest rates on small unsecured personal loans have rocketed due to the credit crunch, one expert has claimed.

Jo Roberts, a director of Needanadviser.com, explained that lenders are "running scared" and are increasing the rates on personal loans as a result of this.

She said: "The trend is for lenders to put their rates up so it makes it worth while for them [to risk lending the money]. This is all the result of the credit problems going on in the world at the moment."

Ms Roberts added that lenders are increasing rates because they want to make their money back on a personal loan as quickly as possible and are worried about people defaulting on their borrowing .

The latest research by Moneyfacts.co.uk found that 12 months ago, the highest rate for loans between £1,000 and £2,999 was 19.9 per cent but that this has now increased to 27.9 per cent as of this month.
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