Loan rates are rising - can you still get a top deal?
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| Worried women (c) Rex |
It seems you don’t always get what you pay for.
The average rate for unsecured loans of £2,500 is now 10.1% compared to an average rate of 9.9% for a £5,000 loan.
A £7,500 unsecured loan now costs around 9.21% – with monthly repayments over five years you would end up paying £1,887 in interest.
Yet the most competitive rate for a £10,000 loan taken out over five years is 6.8%, as offered by Tesco Personal Finance and Barclaycard – meaning you would pay £1,824, £63 less, in interest over the same term as the £7,500 loan.
YourPersonalLoan.co.uk and Moneyback Bank charge 6.9% for an equivalent deal. Masterloan also offers a five-year £10,000 loan at 5.8%, but it’s only available by telephone.
Both Tesco Personal Finance and Masterloan also charge interest of 6.8% on a £5,000 loan taken out over three years, YourPersonalLoan.co.uk has a rate of 6.9% on an equivalent loan while Moneyback Bank charges interest of 7.4%.
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Let your credit do the talking
For those with an excellent credit record, consumer-to-consumer lender Zopa has the best rate at 6.6% for a loan of £5,000 taken out over five years.
Even borrowers with less than perfect credit records should be able to find a deal to suit them, although experts warn they must be prepared to pay more than a few months ago.
Moneysupermarket.com’s loan comparison service has a “Smart Search” facility provided by credit reference agency Equifax, which estimates your credit score and then shows which loans you’re likely to be accepted for.
Finally, if you’re struggling to find a lender prepared to offer you a loan, check your credit record with one of the major credit agencies.
Mistakes on your credit file could be to blame and you may be able to improve your file – for example, by making sure you are on the electoral roll.
