Interest On Personal Loans Rises as Banks Push for Profits
Personal loan interest rates have steadily crept up recently, as lenders seek to reclaim their losses from ordinary debtors. Numerous changes have occurred in the past fortnight; Barclaycard have raised their loans by 0.5% and Natwest by 2.5% in this period of time. Some interest rises are much more extreme, with loans from Black Horse jumping by 11% in some cases.
It’s unsurprising that these changes have occurred, particularly in the wake of the credit card interest increases that have been going on since the credit crunch started. Perhaps, given the ruling on unfair bank charges that the OFT has made, the banks are anticipating mass payouts to consumers in the next few months. The banks are trying to protect themselves and maximise their profits in the wake of some substantial profits. The days of cheap borrowing are over – maybe temporarily, maybe for the foreseeable future. While these rises will hurt debtors, at least they are straightforward interest hikes. The number fiddling and hidden charges that have been brought in on a range of credit cards are much more likely to catch debtors unawares.
Those who considering taking out a personal loan to shore up their finances are advised to research thoroughly before taking a loan out. Some good deals are still out there, but it is important to remember that interest rates are typically more punishing for the smaller loans than for the larger ones – a loan of £1000 from Black Horse has a 27.9% interest rate, whereas a £7500 over five years has a 16.9% rate of interest. Of course, there’s no reason to get a bigger loan than you need just to get a better rate of interest and Payment Protection Insurance is usually best left well alone. It’s regarded as one of the poorest forms of insurance that can be taken out, with the banks offering PPI that is particularly poor value for money. Any loan that is taken out needs to be affordable, and with a clear repayment plan in place.
