- Thursday, 1 April 2010The interest rates charged by lenders for small loans have more than doubled in just four years, sparking concerns that people could struggle with their
debt management.
In 2006 the top 10 average interest rate on a £3,000 loan was 6.49 per cent, but today stands at nearly 15 per cent, research has shown.
Borrowers are therefore repaying twice as much in interest payments as they were.
Tim Moss, head of loans at moneysupermarket.com, who compiled the study, was dismayed, if unsurprised, by the news.
"Providers are hitting consumers in the pocket by increasing their margins across the board," he said.
"The days of cheap loans now seem a distant memory, as banks appear to be less willing to compete in the unsecured loans market."
He advises customers to shop around for the best deal.
Consumers could be left facing spiralling debts on relatively small initial loans. For those people, experts advise that professional debt advice should be sought as early as possible.
Individual voluntary arrangements and
debt management plans could help people to manage their budgets more effectively, freeing up a bit of extra money for basic amenities.
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