Personal loan rates hit six-year high

by Gill Montia

Story link: Personal loan rates hit six-year high

Financial website, Moneyfacts.co.uk, has revealed that this month, interest rates on new personal loans have hit a six-year high.

According to the website’s data, this time last year, the most competitive £5,000 loan year came with an interest rate of 6.3%.

Twelve months on, the most competitive loan for the same amount is sporting an APR of 7.6%.

Furthermore, the average rate for such a loan stands at 11% today, compared with 8.1% in August 2006.

With no significant improvement in credit conditions on the horizon, Michelle Slade, analyst at Moneyfacts, warns that the outlook is grim for consumers who may be considering consolidating existing debts to reduce their monthly expenditure.

She adds that in the last few years the market for personal loans has been extremely competitive but that in today’s market consumers need to make sure they shop around and carefully consider payment protection options, as a loan company may be offering poor value, compared to an independent provider.