Loan rates 'highest for nine years'

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Loan rates 'highest for nine years'

Mon 1st Feb 2010

The cost of repaying a loan is at its highest level in nine years, according to new figures.

At present, the highest personal loan rate reported by Moneyfacts.co.uk is 8.9 per cent. The last time prior to this when repayment rates were higher was in 2001, when they hit 9.4 per cent.

However, nine years ago the Bank of England base rate stood at six per cent, compared to the 0.5 per cent it is currently at.

Michelle Slade, spokesperson for Moneyfacts.co.uk, said that the adverse market conditions mean that banks are only offering loans to the most creditworthy customers and even then they are at a premium.

She added: "With a £1,055 difference between the cheapest and most expensive £5,000 personal loan, shopping around is key."

But she went on to warn that making too many applications for loans will affect an individual's chances of being accepted.

To help consumers who have taken out loans on their credit cards, the personal finance site has called for greater clarity over how payments are used to clear debts.

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