Lenders put on the squeeze but there are still deals to be found
(For more future updates, kindly subscribe to this blog's feeds via RSS reader or via e-mail.)
While loans have been becoming harder to come by a new set of figures shows that even if you manage to get one you will be paying much more than before for the privilege as banks and building societies move to protect their profits in the face of the crunch.
The trend has become even more marked in the last fortnight, with a host of lenders pushing up selected rates. These include Barclaycard’s rise of 0.5 per cent, Lombard Direct increasing by one per cent and NatWest by 2.5 per cent.
The trend was originally confined to mortgages but has recently moved to encompass personal loans too. Black Horse has increased rates for those looking for smaller loans by as much as 11.0% points, adding £52.68 in additional interest on a £1,000 loan paid over one year.
But hope is not lost, there are still some bargains for those prepared to put in the time and effort. Despite the hikes, there are still some good deals available to those who shop around. Moneyback Bank, Britannia BS, Yorkshire Bank and Clydesdale Bank have all reduced selected rates since the beginning of the year.
Anyone looking to take out a £5,000 loan with Yorkshire Bank or Clydesdale Bank will have seen rates reduced by as much as 7.0%.
It is worth bearing in mind that smaller loans cost more in interest. Black Horse for example now charges 27.9% on a £1,000 loan over one year, but only 16.9% on a £7,500 loan over five years.
Another tip is to avoid Payment Protection Insurance (PPI) from the loan provider. PPI has been subject to an investigation by the Financial Services Authority, the City regulator, following complaints that the policies were mis-sold and people were unable to claim because of caveats in the policies.
The cover also has one of the poorest payout records in the industry: only 20% compared with 80% for car insurance, for example. Independent firms offering PPI such as Britishinsurance.com and Paymentcare.co.uk are up to 50% or more cheaper.
So once again the lesson is to shop around first before making any decisions about personal finance. My personal feeling is that PPI is a total waste of money but some people still disagree. This also goes to show that despite the constant harping on about the credit crunch there are still good deals on personal finance out there for those committed enough to look for them.
