The base interest rate might be at an all-time low, but
personal loan rates in the UK remain at a nine-year high. According to researchers, it's down to the fact that providers will only offer
personal loans to "the most creditworthy" applicants in what is a risk-adverse market.
Financial analysts at Moneyfacts also note that, unlike with a
mortgage, there is no security that
personal loan debts will be repaid, particularly while unemployment remains high and individuals are struggling to meet repayments.
Borrowers are reminded that the majority of lenders advertise typical rates, meaning they shouldn't be surprised if they have to pay a higher
personal loan rate than the one they've seen. Making multiple applications is also warned against, since doing so reduces people's chances of being approved for a loan.
Commenting on the
personal loan findings, Moneynet's Andrew Hagger further suggested providers currently lack "the highly profitable
Payment Protection Insurance cash cow", so lower loan rates cannot be subsidised, in effect.
Banks and building societies' ultra-cautious stance - even when it comes to
mortgage lending, with customers' property as collateral – means it's unsurprising the appetite for unsecured lending has "pretty much dried up", he concluded.
Financial News
