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28 Mar 2024
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News

Loan rates at seven year high

Michelle Slade, analyst at Moneyfacts.co.uk, comments:

“The last month has seen another flurry of lenders increasing rates on personal loans. As a result, borrowers are facing the highest levels of repayments seen in the last six years.

 

Date

Lender

APR

Monthly repayment

August 2008

Moneyback Bank

7.6%

£155.27

August 2007

Moneyback Bank

6.3%

£152.48

August 2006

Moneyback Bank

5.6%

£150.98

August 2005

Northern Rock

5.7%

£151.08

August 2004

Liverpool Victoria

6.0%

£151.74

August 2003

Lombard Direct

6.6%

£153.03

August 2002

Abbey National

7.1%

£154.11

August 2001

Northern Rock

8.5%

£157.19

Figures are based on a £5K loan over 3 years
Source: Moneyfacts.co.uk 13.8.08.

 

“The table above shows the cheapest deal on offer for a £5K loan, but many consumers going straight to their bank could be paying a much higher price.

“In the last few years the market for personal loans has been extremely competitive as lenders and borrowers alike cashed in on the availability of cheap credit. Increased competition pushed prices down and lenders continually undercut each other in order to top best buy tables.

“Since August 2006 the average rate on offer for a £5K loan over three years has increased by just under 3%, from 8.1% to 11.0% today. With no real signs that conditions are going to get better in the near future, rates could get much higher yet.

“This is extremely bad news for consumers who may be considering consolidating existing debts to try to drive down their monthly expenditure.

“At a time when every penny counts, if you need a personal loan, you need to make sure that you shop around as it is highly unlikely your bank will offer the best deal. Currently on a £5K loan there is a difference between the cheapest and most expensive loan of £25.55 per month, which equates to £919.80 more over three years.

“Another point to bear in mind is payment protection insurance (PPI). This is where most companies make their money and the amount charged varies from lender to lender. A loan that offers the lowest rate without PPI may not be the cheapest loan once it is included. If you need PPI, it is worth considering independent providers who offer the same level of cover at a much lower price.”

 

Moneyfacts Group
Moneyfacts is the UK’s leading independent provider of personal financial information and our data is used and trusted throughout the financial industry. 

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Think carefully before securing other debts against your home, your home may be repossessed if you do not keep up repayments on your mortgage.

Go Direct.co.uk is a trading style for website purposes of Go Direct UK Ltd.

Go Financial Services is a trading style of Go Direct UK Ltd which is an appointed representative of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales Company 5703224. FCA Number 456600

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