Personal loan providers hike rates

by Gill Montia

Story link: Personal loan providers hike rates

Research from financial website, Moneyfacts, shows that people with personal loans are being hard-hit by rising repayment rates.

According to the data, 14 providers including Abbey, AA, Tesco Personal Finance, Bank of Scotland and Direct Line have hiked rates in the past month.

In the case of AA and Tesco Personal Finance, two rises have taken place.

Abbey tops the league for the biggest one-off rise, having added 5% on loans of less than £4,950, taking interest to 12.9%.

Other lenders to have raised rates include Alliance & Leicester, Bank of Scotland, Barclaycard and Barclays.

Moneyfacts analyst, Esther James, comments that the hardest hit will be those who want to control their finances by reorganising a number of loans into one.

For some, the tried and tested formula of reducing monthly outgoings by consolidating debt may no longer be effective.

Moneyfacts.co.uk is also advising borrowers that specific interest rates on modest loans need attention.

In one case a saving of £324 can be made by borrowing £5,050, rather than a flat £5,000.