Only one loan provider on the market now offers a sub-six per cent loan, Moneyfacts.co.uk has revealed, a development which may indicate that banks are increasingly unwilling to lend to vulnerable consumers.
Masterloan, the sole sub-six per cent lender, offers a typical loan rate of 5.9 per cent on advances worth between £5,000 and £15,000, but nine lenders raised their loan interest rates by one or two per cent in the last week alone.
Higher personal loan rates can increase the financial burden on consumers, Michelle Slade, personal finance analyst at moneyfacts.co.uk has warned, with even small loans of around £3,000 to £5,000 becoming "over twice as expensive as a larger loan from the same provider".
Paradoxically, credit card loans seem to be becoming cheaper even while unsecured standalone loans become dearer, as the "zero per cent credit card market" flourishes.
The key for consumers, Ms Slade stresses, is to look beyond the 'typical' loan rate advertised before taking on any personal loan, since your personal rate will vary according to your credit rating.To learn more about personal loans, click here.
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