Only four unsecured loan providers in the UK are offering rates of under six per cent on loans of £5,000 over three years, moneyfacts.co.uk has found.
Since the base rate rise in January, eight lenders have increased their unsecured personal loan rates by as much as eight per cent, and over 40 per cent of lenders in the market now charge over eight per cent on unsecured loan products.
Making borrowing more expensive could deter consumer borrowing – a move which consumer groups and financial advice services view as a positive development, given the gravity of the personal debt situation in the UK, the most indebted country in Europe.
Moneyfacts' personal finance analyst Michelle Slade suggested that customers hoping to service existing debt and end the borrowing cycle for good could opt for a credit card loan deal instead of an unsecured loan.
But they should ensure they repay as much as they would on a structured loan instead of making only minimal repayments on the debt, she stressed.
Alarmingly, a recent study from secured home loan providers Picture Financial revealed that one in three people do not know how much they pay in monthly loan repayments.For more information about unsecured loans, click here.
© Adfero Ltd