UK Money News
26th March 2008
Lenders raise rates on small unsecured loans
Interest rates on small, unsecured loans have seen a dramatic increase over the last year as lenders react to economic uncertainty, it has been claimed.
Jo Roberts, director of Needanadviser.com, said that the rises can be attributed to "lenders…running scared of the credit crunch".
She continued: "The trend is for lenders to put their rates up, so it makes it worthwhile for them [to risk lending the money]. This is all the result of the credit problems going on in the world at the moment."
The outlook for borrowers is likely to get worse before any improvement is seen but that the situation should improve within around 12 months, according to Ms Roberts.
She concluded: "There is a lot of knee jerk reaction going on, but it will settle down. It always does."
A study conducted by the Financial Services Authority earlier this year found the highest rate offered by a provider on a small loan of £1,000 is 27.9 per cent.
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