Make sure you your homework to land the best personal loan deal
The Bank of England Base Rate may have remained frozen at an all-time low of 0.5 per cent since March, but loan rates have continued to head
upwards - making the gap between the base rate and the average loan rate bigger than ever.
A large number of unsecured loan providers have hiked up their rates over that period, and while most have introduced increases of up to 1 per cent,
some have increased rates by as much as 2 per cent.
This is worrying news for those already struggling to manage their debts, as these "tweaks" in pricing will add hundreds of pounds in interest on a
Stricter lending criteria
Not only are loan rates rising, but lenders are also continuing to tighten their lending criteria.
Rising unemployment has meant the risk of customers defaulting on unsecured loans has increased, so providers are therefore only accepting
customers with blemish-free records.
This means that those lucky individuals who do get their application accepted are then having to pay a higher price - essentially to cover the defaulting
customers who took out loans previously at more competitive rates.
Further hikes going forward
And the bad news for those looking to take out a personal loan is that the upward trend in rates looks set to continue - making it more important than
ever to do your homework when searching for the best deal.
That said, if you do have a clean credit history, there are still some decent deals up for grabs: for a loan of between Â£7,500 and Â£15,000 over five
years, Alliance & Leicester and Tesco are both offering a rate of 8 per cent, while Halifax has a rate of 8.1 per cent.*
Rewards for loyalty
It's also worth noting that while with most financial products, providers reserve their best deals for brand new customers, it's a very different story in the
personal loans market where the best deals are currently being offered to existing customers.
In short, with consumers struggling to make ends meet, loan providers are looking t