Bigger Loans May be Cheaper

Fri, 13 Aug 2010

New research from moneysupermarket.com has revealed that it remains worthwhile for borrowers to consider borrowing more than they need in order to get a better deal. Since the onset of the economic downturn, finance experts have warned borrowers that the high interest rates on small loans are at times prohibitive, meaning borrowers can be better off taking out larger loans in the first place.

Borrowers are now paying 135 per cent more for a loan of under £5,000 than they were four years ago, while interest rates on loans of over £5,000 continue to decrease, albeit gradually. Indeed, a personal loan of £4,500 repayable over five years would typically cost £1,643 in interest, whereas a loan of £5,000 may only cost £1,150 in interest.

Eager to accept only the most credit worthy of applicants, banks have become anxious about who they lend to since the subprime crisis – an approach which has seen payday loan lenders become more prominent as mainstream forms of lending become increasingly difficult to obtain for any borrowers whose credit records are not perfect.
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