Cost of borrowing personal loans rises sharply
26/01/09
According to new research from Moneyfacts.co.uk the cost of borrowing personal loans in the UK has risen sharply. Compared to eighteen months ago, you can expect to pay an extra £262.27 in interest payments as a result of the increase in costs on a loan of £5,000.
Rates on loans have risen since June of last year compared to now, and borrowers can expect to pay more interest on both secured and unsecured loans.
Despite the Bank of England cutting its rate, rates on loans have still seen an increase so borrowers can expect to pay high APRs. The higher the loan value, the higher the interest rate impact as the more money you borrow the more you can expect to pay in interest.
Analyst at Moneyfacts.co.uk, Michelle Slade commented, “Rising unemployment and a declining economic outlook have meant the risk of customers defaulting on unsecured lending has increased. As a result, borrowers are paying a significantly increased rate than they were 18 months ago.”
She continued, “With stricter lending criteria, it is now much harder to be accepted for a loan and if you are, you will be paying a premium for the benefit.”
