Consumers are being advised to check the small print on their personal loans following a report from uSwitch which revealed that UK providers are pushing up interest rates in the run up to the Christmas period.
Typically, the winter months are a time when many people choose to take out a loan to cover excess spending, however, despite the Bank of England raising rates by 0.25% over the summer, research shows that a total of 32 personal loan providers have upped their rates by a further one per cent over the same period.
Mike Naylor, Personal Finance Expert at uSwitch explains: "The availability of the sub six per cent loan is now just a distant memory - however, the market is vast and there are still competitive rates for those who take the time to compare the offers available."
Online deals have risen by 0.2 per cent on average, compared to a startling five fold increase for loans arranged ‘offline’ in branches or over the phone which have gone up on average by at least one percent.
What’s more, seven high street banks have been found to be offering 'personal pricing' services for offline loan purchases. This ‘service’ enables the bank to charge extra for an individual rate, meaning customers may be paying over the odds for an individual rate rather than being offered the typical APR which could be significantly less if they signed up online.
Mr Naylor adds: "There are already huge variations in the loan rates available to consumers amongst both online and offline deals, throwing the personal pricing smoke screen into the melting pot is just causing further confusion."
While personal pricing may not appeal to many, there are some benefits such as permitting those with a good credit rating to take out a loan with the best possible rate rather than paying a flat rate based on the overall risk to the entire population.
However, for those who have internet access, loans arranged online are more likely to maintain a low interest.Compare loan rates
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