PPI crackdown ‘signals the end of cheap loans’

MoneyFacts has said that some of the most affordable unsecured loans on the market  some of which are still below six per cent APR  could reach ten per cent or more before the end of the year.

According to the firm, eight lenders have already increased their personal loan rates by up to eight per cent on some tiers. In addition, some have altered the rate tiers, making it more expensive to borrow smaller amounts.

Analyst Michelle Slade said that the PPI review by the Office of Fair Trading could force lenders to lower the cost of their insurance cover and revert to a ‘pay as you go’ policy instead of a single premium.

“We could potentially see best buy loan interest rates reaching double figures before the end of 2007,” she said.

Price comparison site uSwitch also expects cheap loan rates to vanish in the “not too distant future”.



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