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Low rate personal loans in danger of 'extinction'

Interest rates on personal loans have risen over the past month, it has been revealed.According to Moneyfacts, sub six per cent loans are in danger of becoming "extinct", as some eight personal loan providers increased their interest rates between one and two percentage points over the past week.

Personal finance analyst Michelle Slade said: "For the last two years, concerns have been raised over the level of indebtedness many consumers face. With growing numbers of IVAs [individual voluntary arrangements], bad debts and defaults, we are not surprised to see lenders becoming more cautious about their lending."

She added that three interest rate increases since August 2006 has also contributed to personal loans becoming more expensive for consumers.

Ms Slade also advised that a number of competitively priced personal loans are still available and consumers should shop around for the best deal they can find.

However, she claimed the amount of zero per cent credit cards continues to "flourish", despite financial providers taking up stricter lending criteria.

Research by the Bank of England revealed the amount of money issued via personal loans fell over the course of January to £10.6 billion, in comparison to £11.3 billion in December.

News Source:
http://www.1stopfinanceshopuk.biz/

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