Personal loan rates creeping up

Thu, 01 Oct 2009

Personal loan providers are boosting their rates as they worry about customers not being able to keep up with repayments .

The average rate for a £5,000 personal loan over three years was 11.2 per cent but this now stands at 12.2 per cent.

According to the Daily Mail, Tesco, Egg and Marks and Spencer have all increased the rates on their personal loans by 0.2, one and 1.2 per cent respectively.

Financial journalist Charlotte Beugge wrote for the newspaper that the best deal currently comes from Nationwide, which is offering a 7.7 per cent loan for existing customers only.

She claimed that those having trouble meeting repayments are causing the rate rises: "All customers will now have to pay a higher cost on personal loans to cover the minority of customers who will actually default."

uSwitch.com recently reported that new Alliance and Leicester customers will have to pay 0.8 per cent more for a £7,500 to £15,000 personal loan after rate were pushed up to 8.7 per cent.
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