Loans Expert

Loan rates is at its seven-year highs as lenders tighten their belts in the wake of the global credit crunch and pass the cost of higher risks to the end customers. The loan rate, since August 2006, for a ?5,000 loan over three years has increased by just under 3 percentage points, from 8.1% to 11% today. This fact is supplemented by the data of the price comparison website Moneyfacts.co.uk. The loan rate on unsecured loans have been at its highest level since 2001. The cheapest deals on a ?5,000 loan are also similar in the lines of 7 year’s past. Back then, the best deal was from Northern Rock at 8.5%; the best today is from Moneyback Bank at a competitive rate of 7.6%. Read also about new rules to stop mortgage fraud.

In the last 2-3 years the market for personal loans has been extremely competitive in the UK as lenders and borrowers alike cashed in on the availability of cheap credit. The increased competition has pushed prices down and lenders continually undercut each other to top the best-buy chart. However, the onset of the global credit crunch has meant banks have had to cut down on the level of risk associated with the loans on their books, which means they are less keen to attract borrowers and more interested in High Street savers. The result has meant higher rates on personal loans and unsecured loans.

The prospective borrowers are advised to keep in mind that loan that offers the lowest rate without PPI may not be the cheapest loan once it is included. If they need PPI, it is worth considering independent providers who offer the same level of cover at a much lower price.

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Tags: Personal Loans