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Getting credit is proving to be more difficult

29/03/08

It looks as though it’s not just mortgage lenders who are suffering in the light of the credit crunch. Getting credit is proving to be more difficult with only the best of borrowers with triple A credit ratings being able to borrow at the most competitive rates when applying for a personal loan.

The best rates in personal loans are now a considerate amount more expensive than this time a year ago. Moneyfacts highlighted this as it monitors financial products on the market place and recognised that the average increase in interest ion personal loans is around 1.7%. In monetary terms what this means is that borrowing a loan for £5,000 over a three year period will cost the borrower around £300 more.

Head of personal finance at monetfacts.co.uk Samantha Owens said “In 2008 alone we have seen 27 changes to personal loan products. In the majority of cases, these have been increases across the board. Traditionally the more you borrow on a personal loan the lower the APR. More recently however, we have seen lenders increasing the rate offered on the higher loans”.

“Over the last year we have seen lenders reassessing how they offer personal loans too, with more and more lenders adopting personal pricing or a credit rating assessment. This is not necessarily bad news for the borrower. Whereas before a prospective borrower was either accepted  or declined, now those lenders that offer an APR dependent on a credit rating will offer an alternative rate to those borrowers who otherwise could have been declined”, Samantha explains.