Borrowers warned over "unfair" loan rates

25/08/2009

Borrowers looking to take out a personal loan have been warned of "unfair" gaps between the Bank of England's base rate and the charges applied by many lenders.

Comparison service moneysupermarket.com said that while the base rate stands at a record low of 0.5 per cent, the typical unsecured loan rate is 10.32 per cent.

A year ago, the gap between the two rates was just 3.4 per cent.

Those looking for smaller loans are also being the hardest hit, it added. People who want to borrow £5,000 can expect to pay almost two per cent more in annual interest than those taking out a £10,000 loan.

Tim Moss, head of loans and debt at moneysupermarket.com, said many consumers are "paying through the nose" for personal loans.

"Borrowers need to keep a close eye out for the best deals and ensure they only apply for products they're likely to be accepted for," he commented.

According to charity Credit Action, total personal debt in the UK stood at £1,458 billion in August.

Tags; Debt Management and Banking, Credit Card Lifestyle, Recent Graduate Debt, Young Family Finances, Retirement Money Problems,

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