Experts Find Huge Difference in Interest Rates of Large and Small Loans

Mon, 25 Jan 2010

Interest rates on small personal loans may be twice as high as those for larger personal loans, according to new figures from financial information website MoneyExpert.com. The financial website claims that the average interest rate on a personal loan of £3,000 currently stands at 19.3 per cent, compared to 10.3 per cent for loans of between £7,000 and £10,000. That figure is less than the 21.1 per cent average rate charged on loans of £1,000 or less.

The research has also exposed evidence of caution among mainstream lenders, who are offering 27 per cent fewer products than at the same stage 12 months ago. In addition, the average interest rate offered on these loans has risen from 13.9 per cent to 14.3 per cent, though a number of more attractive offers have been launched recently. However, these deals on apply to applications for £7,500 or more.

Experts are, therefore, warning consumers of the dangers of being persuaded to borrow more money than they require. While banks may suggest that the cost of borrowing the extra money is minimal, the amount of interest to be repaid rises with a larger loan, and in likelihood the repayment period of the debts will also extend.
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