Loans -
Cost of Personal Loans Skyrockets - 24/03/2008
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The cost of a personal loan has risen sharply this year, but those looking to borrow more have a larger choice of cheaper deals than they did before.
Those looking for an unsecured loan of around £1,000 have seen interest rates increase by 1.6% since January – an extra £27 added on to the cost of a 3 year loan in just 3 months. Consumers wishing to borrow £20,000 or more, however, have experienced a slight drop in their interest rates, from 8.1% three months ago down to 8% this month. For those looking somewhere in between, the interest rates on a £2,000 loan have increased by 0.8% on average, while a £3,000 has seen an increase of 0.5%.
Compared to a year ago, the figures look even worse. Even though the Bank of England base rate of interest was the same, interest rates on loans have consistently risen – as high as 4.6% for a £1,000 loan.
Julia Harris, from financial data experts Moneyfacts, said: "The ongoing credit crisis has seen institutions concentrating on getting money in the door and becoming more expensive and selective when lending money out."
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