The cost of
personal loans under £5,000 has risen substantially in the last ten years, new research has indicated.
According to a study conducted by moneysupermarket.com, consumers taking out a loan for less than this sum are now paying 135 per cent more than four years ago.
The cost of all
personal loans has been steadily increasing since 2006, but those for more than £5,000 have become slightly more competitive in the past six months.
Borrowers have now been advised to consider increasing their loan by a relatively small amount, as it will ultimately cost them less to pay back.
Currently, a person borrowing £4,500 over five years would pay back £1,643 in interest, whereas a loan of £5,000 over the same term would require an additional £1,150 in repayment.
Tim Moss, head of loans and debt at moneysupermarket.com said: “The credit crunch has really impacted borrowers who are looking for smaller loans. Not only is it more difficult to get a loan, with many lenders tightening their approval criteria, those that do manage to get one will undoubtedly pay through the nose.”
