High loan interest rates will hit the poor
09/12/08
With new plans for building society Nationwide to have a risk based plan for those applying for personal loans, those on low incomes could face soaring interest rates. Other groups who will be affected by higher rates on loans are those who have a poor credit rating and people who do not have as much disposable income. These people could be faced with loan interest rates as high as 19.9% with Nationwide’s new personal loan plan.
Currently whether you fall into a high income bracket or low, loan rates would be the same however with the new scheme, different groups of borrowers will face higher or lower rates depending on income and other factors.
This will mean that the poorer will find it more difficult and more costly especially during these hard economic times to pay back loans. This news comes as more and more people are in trouble with their finances and Nationwide’s plans for the new scheme are partly to protect themselves and reduce the risk of borrowing to those who fall into the high risk category.
“As a prudent lender in the current credit environment it is important that in pricing personal loans, we are placing a greater emphasis on risk and lending appropriately,” commented director of consumer finance from Nationwide, Jeremy Wood.
