A recent report claims that UK borrowers could be paying way more than they should be, due to some lenders pushing up interest rates far higher than the Bank of England base rate rises over the past year. Despite interest rates being reduced last December, there were five increases between August 06 and July 07, taking the base rate up to 5.75% before it was eventually reduced to 5.5% by the end of 2007.
However, according to the report, some lenders are guilty of hiking up rates over and above the base rate rises since November 06. This means some customers have been subjected to interest rises far in excess of the base rate. The report claims that those borrowing in the region of £3,000 would be most affected, with average rises of 2.5% since November 06.
It is usually true that the more you borrow, the lower the interest rate, but the report claims that even people borrowing large sums have been severely affected.
As the cost of living continues to rise, the obvious choice for those feeling the financial squeeze can be to take out a personal loan to make up the shortfall. But as this report emphasises, it's always best to be fully informed and aware of the overall cost when taking out a loan to consolidate debts or make a significant purchase.
