Thursday, 07 Jun 2007
it might actually be cheaper to borrow larger amounts with some personal loans, new figures show.
This is because personal loans of under £5,000 have become more expensive while the cost of loans of over £5,000 has dropped or barely moved.
"It really is the case for the customer that bigger is better when it comes to personal loans. The more you borrow the better the deal you get. The less you borrow the more the lenders cash in," said Sean Gardner, chief executive of MoneyExpert.com - who conducted the research.
The average annual percentage rate (APR) on a £1,000 loan has increased from 14.63 per cent to 16.1 per cent since November 2006.
Personal loans of £2,500 have risen in cost from 14.13 per cent to 15.41 per cent and rates on a £3,000 personal loan have risen from 12.35 per cent to 13.8 per cent.
Over the same period the cost of a £5,000 personal loan has dropped from 8.74 per cent to 8.62 per cent on average, with the interest charged on the largest personal loans staying at 7.5 per cent.
"Lenders have kept rates down on larger loans despite Bank of England increases while pushing up rates on smaller amounts," said Mr Gardner.
"The fact that loan firms are focusing on keeping their big borrowing competitive suggests those looking for modest loans are seen as small fry. Fortunately there are still some very good deals to be had so the trick is to keep abreast of market developments and shop around."
http://www.myfinances.co.uk/loans/news/personal-loan/smaller-personal-loans-
can-cost-more-$474560.htm
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