Consumers "paying through the nose" for personal loans

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Consumers "paying through the nose" for personal loans

Mon 24th Aug 2009

Competitive personal loan rates are becoming increasingly hard to find despite the Bank of England's low base rate, says moneysupermarket.com.

Tim Moss, head of loans and debt at the comparison site, believes it is partly the "clampdown" on sales of payment protection insurance that has led to rises in lending rates, as providers look to raise money to balance their books.

The base rate has been at 0.5 per cent since March this year, yet research by the comparison site shows that to borrow £5,000 or less will cost up to 10.32 per cent in interest.

He says: "Loan rates have continued to rise, leaving consumers paying through the nose for their personal loans."

Mr Moss claims that interest rates for loans were down slightly in August, but that lenders would have to reduce them much more if they were going to entice more customers.

The website recently commented on the news that Nationwide was offering a personal loan rate of 7.7 per cent, saying it indicated "green shoots" of recovery in the market.

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