Loans- Rates Rising Does not Have the Presumed Cost

Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:”"; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin:0cm; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”; mso-ansi-language:#0400; mso-fareast-language:#0400; mso-bidi-language:#0400;}
2 years ago we were able to find rates around 5.6% on a £10000 loan, a year ago this figure rose to 6.1% and today the lowest rate customers can find is 7.2%. This increase is mainly due to the credit crunch and the fact that the industry is losing billions of pounds a year due to a loss in profits.
 
Many customers have been scared off by these figures but when you look at the cost of the increase in rates, it is not as alarming as we thought. If you applied for a £10000 personal loan 2 years ago, you would have been paying £191 a month, this time last year the same amount would have resulted in payments of £193 a month. On today’s rates, this calculates as £198 a month.
 
As you can see the rise in interest rates has not affected personal loans as much as we all thought and customers should not be put off loans altogether and should consider a loan as a viable option when looking to pay those all important bills. Although on paper the increase looks as though we would all be out of pocket, the difference for loans is actually quite small.
 
In fact the average rate on a loan was extremely high up until 2003 when people realised shopping online and buying through smaller lenders rather than banks would save them money. In 2002, the average rate for all types of loans such as secured loans and payday loans were 12% which certainly makes today’s rates look very good.
 
Unfortunately for customers, providers are still being very strict on their lending which means it is as important as ever to shop around for the best deals. You will find the best deals on loans by shopping online and comparing the individual lenders and all their offers. Although interest rates may seem considerably higher, the effects on our outgoings are minimal.
 
Interest rates on loans are rising but this does not mean that we have to spend a lot more. It works out as an extra £5 a month more on personal loans . Some loans such as secured loans are more expensive to obtain but can be easier to get one as the lender has come collateral.