The loans rate hike

Unsecured personal loans. Over the last year interest rates available on unsecured personal loans have continued to increase. The average rate for all loan amounts is now up to a maximum of 4.6 per cent higher than they were in March 2007. Smaller loans have seen the higest increase with the highest rate for loans of £1K to £2,999 was 19.9% 12 months ago this was with Marks & Spencer Money, Sainsbury's Bank and Britannia BS. In March 2008, the highest rates are a staggering 27.9% with loans from Black Horse.

Rates for bigger amounts have not escaped the huge increase. Masterloan was offering rates of 5.9% for loans of £4K to £15K, in March 2007. However the best deal available today is 6.7% from Moneyback Bank for loans of £5K to £15K. Although the interest rate increases for borrowing over £3,000 have not been so high.

If you're lookig to get a loan this year then unfortunately you will have to pay out far more in repayments per month than you would have done at any point in the last few years. The US credit cruch has created an ongoing credit crisis here in the UK and Europe and it's made lender concentrate on making money at the forefront of their plans and also tighten lending criteria. Back in 2006 Northern Rock were offering loan rates of just 5.6% for any loan amount. If you'd taken out a Northern Rock loan back then you could have saved around £1,600 in interest, based on comparing a £25,000 loan. The thing now is that lenders are tightening their lending criteria but more changing it too. Money is now lent on a personal basis so if you have missed payments in the past or have CCJs you could end up being refused a loan.

Secured loans; the secured loan market has also been put under pressure. Many lenders have stopped offering secured loans completely. Also the loan amount lenders are willing to give to customers is dropping. The world of 125 per cent loan to value loans no longer exists and now the best rates are around 6.4 per cent compared to 5.9 per cent this time last year.

The credit crunch is still affecting all types of borrowing and so rates will continue to increase across the board of finance products.