Loans Cost £1.2bn More in Interest

CONSUMERS taking out best- buy unsecured loans could expect to pay £1.2bn more in interest than they would have if they had taken the loan out just more than a year ago.

According to uSwitch.com In the past 13 months alone, these “table-topping loan deals” have risen from just 6.1% annual percentage rate to 7.4% APR for £8,000 over four years. With the Bank of England base rate dropping from 5.75% to just 5% over the past year, unsecured loans buck the trend and have continuously risen.

It is estimated that 1.39 million people have had loan applications rejected since the beginning of the credit crunch.

This provides further evidence that the “credit crunch” is actually more of a “credit clampdown” as nervous lenders hold onto their cash.

Consumers who successfully secured a loan in July 2007 will end up paying £285.60 less in interest on a best buy deal of 6.1% APR compared to today’s best buy at 7.6% APR.

Simeon Linstead, head of personal finance expert at uSwitch.com, the online price comparison and switching service, comments: “The loans market is extremely volatile at the moment and best-buy deals have become more expensive over the past 13 months.

“However, the market is vast and there are still competitive rates for those who take the time to compare the offers available.

Source : http://www.walesonline.co.uk/