Now's the time to 'shop' around for the best personal loan rates
If it wasn't bad enough that the interest rate on credit cards has edged up to 16.7 per cent, the second highest figure recorded since early 2002, new figures from the Bank of England show that the avergae interest rate on £5,000 personal loans has reached the highest recorded figure, at 15.5% since records began in 2005. The 2.2% increase from last month's rate, despite the base rate remaining at the deliriously low 0.5%, was also the highest ever month on month increase.
So what's going on? Are the banks just taking the piss? Are they trying to recoup their estimated millions in PPI payouts? Would they rather you took out a £10,000 loan, whether you need that much or not? Amazingly, the average rate for a £10,000 loan fell last month to 9.01 per cent.
But besides depressing you with this news, is there anything that can be done? Well, financial advice site Moneyfacts are urging those seeking a decent rate on lower-value personal loans to look beyond the big high street banks. “The Bank of England looks only at the major high street banks when calculating its figures. It doesn’t take into consideration smaller players such as Tesco, Sainsbury and M&S which tend to offer much better deals."
“You can currently obtain a £5,000 personal loan at 8.2 per cent from Sainsbury and it’s no more complicated than going to a bank. You can collect the details when you do your next shopping trip.”
Supermarkets offering almost half the rate? Isn't that like a BOGOF? I'll have two. That'll teach 'em.