Unsecured loan rates up

Thu, 06 May 2010

New research has revealed that the average interest rate of unsecured loans has gone up despite the low base rate .

According to the study by independent financial research company Defaqto, the average rate is now 12.9 per cent, up from 8.8 per cent in 2007.

The organisation has put this down to the fact that the number of loan providers has gone down during the period and also a general lack of appetite for risk from lenders.

Kevin Bray, insight analyst for banking at Defaqto, said: "There is some good news for consumers following the recent announcement from the government about changes to credit card rules and in particular how payments are allocated.

"From January 2011 providers must allocate payments to the transactions attracting the highest rate of interest and this is expected to collectively save consumers between £300m and £500m."

Recent statistics from Credit Action showed that, at the end of March, the average consumer borrowing through credit cards, motor and retail finance deals, overdrafts and unsecured personal loans was £4,593 per average UK adult.
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