Average personal loan rates have increased by 8.3 per cent over the past two years, according to new findings from Sainsbury’s Finance.
The analysis shows the average rate of personal loan rates from organisations offering loans in both September 2008 and September 2010 increased from 13.2 per cent to 14.3 per cent.
Sainsbury’s Finance offered a rate of below 8 per cent APR two years ago (7.7 per cent APR for balances of £7,500) and says it is still offering this today.
The bank’s analysis reveals that, of all the personal loans available two years ago that are still on the market today, 62.5 per cent increased their rates, 25 per cent kept them the same and 12.5 per cent reduced them.
“In the past two years, there has been huge change in the personal loans market,” said Steven Baillie, Head of Loans, Sainsbury’s Finance.
“There are around 40 per cent fewer providers today than there were in September 2008. This reduction has contributed to rates becoming less competitive, meaning it is now more important to shop around for the best deal.”
Average Personal Loan Rates Up 8.3 percent & Equity Release
What Is Equity Release?
Equity release is the use of financial arrangements that provide the owner of a house, or other property, with funds derived from the value of the property while enabling them to continue using it.
How Does Equity Release Work?
Equity release is aimed at homeowners aged 55 and over. It allows you to take some of the value of your home as cash.
How does Equity Release Loan differentiate with Personal Loan?
Whether you want to consolidate debt, finance a major expense or access cash for another financial need, you could compare a home equity loan versus a personal loan as potential financing options. Both loan types typically come with fixed interest rates and fixed payments over a set repayment term.
However, there are stark differences you’ll need to consider when comparing home loans versus personal loans. Home equity loans tend to have lower interest rates, but require having equity in your mortgage — on the other hand, personal loans are often funded much faster, but typically require good credit scores.