The Slow Death Of Sub 6 Per Cent APR Loans
12 January 2007
Loans are becoming pricier, uSwitch.com reveals, as it predicts the end of the sub-six per cent loan market.
AA, Northern Rock and Moneyback Bank have raised interest rates on their loans to take them over the six per cent mark in 2006, the independent advice site found.
Personal finance director Nick White commented: “We have predicted for some time that the end of the sub-six per cent APR loan era would soon be upon us … this is becoming a harsh reality with three of the most competitive personal loan providers, AA, Northern Rock and Moneyback Bank, increasing APRs by up to 0.2 percentage points over the past two months.”
Mr White anticipated that these low loan rates would vanish entirely in the “not too distant future”.
Instead, “less competitive” loan deals now dominate the market – bad news for borrowers, uSwitch stressed, particularly those who were able to repay existing debt thanks to a low-rate loan.
On the other hand, higher APR rates could make customers think twice before borrowing, even to consolidate debt – a more cautious approach urged by many independent financial advisers.