Shop for best loan deal as rates may creep up

London (loans-bazaar) 13 Feb 2007: According to the statistics released by the website moneyfacts.co.uk, the interest rates of personal loans may creep up this year. So, it is advisable for the consumers who are going to take a personal loan should shop around for the best loan deal.

The figures also reveal that for a loan amount of £5,000 over three years, the rates may vary with different loan providers. There are only four loan providers in the UK, who offers rates at six percent. On the other hand, around forty percent of the loan market has an interest rate more than eight percent, whereas 16 percent of the lenders offer loans at the rates above ten percent.

Michelle Slade, who is a personal finance analyst at moneyfacts.co.uk, says "Although personal loan rates are not directly impacted by the base rate rise, since the last rate hike in January, moneyfacts.co.uk has seen eight lenders increase their unsecured personal loan rates by as much as eight percent for some tiers."

Ms Slade has also said that the OFT (Office of Fair Trading) is going to review payment protect insurance (PPI) this year. Therefore, the best interest rates for personal loans can rise to double figures by the end of this year. The lenders would have to lower down the cost of PPI cover and will have to return back to the policy 'pay as you go' rather than single premium.

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