Cheap personal loan advice offered
One industry figure has given consumers some advice on how to get a personal loan with a good rate in the current economic climate.
Stewart Farr, from financial advice website Moneyextra.com, said that details such as typical APR can be misleading when shopping around for cheap personal loans, as lenders change the rate a customer gets depending on their credit histories.
Mr Farr said: "The Consumer Credit Act of 2004 stipulates in its rules for the advertising of loan rates that two-thirds of successful loan applicants responding to an advertisement must be offered the quoted APR.
"The unlucky one-third draw the short straw of risk-based pricing, whereby credit history is scrutinised and personal loans offered (if at all) are at a more expensive APR," he explained.
Writing for MSN Money, Mr Farr added that consumers should check to see how much they would pay both monthly and in total in order to ensure they are getting a cheap personal loan.
If two products have similar rates, one may offer lower monthly repayments at the expense of paying a greater amount over the whole course of the loan.
The expert concluded by noting that borrowers should be careful when signing a contract that the lender has not automatically added payment protection insurance, as this is bad practice and can boost the price of a loan significantly.
uSwitch.com recently revealed that three companies providing personal loans have hiked rates on their products for new customers, despite the low-interest environment.
Marks and Spencer, Egg and Alliance and Leicester have all increased rates by as much as 1.2 per cent.
Written by Garry Sagan
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