Tuesday 2nd of February 2010
Individual voluntary arrangement (IVA) questions could be on the lips of those Britons with a number of personal loans, after it has been revealed that interest rates on such borrowings are at a nine-year high.
Loans of £5,000 from Northern Rock came with a 7.9 per cent annual percentage rate (APR) in 2002, dropping to 6.9 and six per cent APR over the following two years, Moneyfacts.co.uk says.
But last month saw a £5,000 loan from Alliance & Leicester standing at 8.9 per cent APR - despite this being 5.9 per cent APR from the same lender at the start of 2005.
Britons with a number of personal loans which stand at over £15,000 may find an IVA proves to be of assistance if they feel they can no longer keep up with current interest repayments.
An IVA can freeze the interest rates on personal loans, which could make it easier for those who find a large part of their income eaten by APRs.
"Unemployment remains high and when people are struggling to meet repayments, unsecured lending is one of the first debts they stop repaying," says Michelle Slade, spokesperson for Moneyfacts.co.uk.
By Kim Parsons
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Unsecured lending is down - is it time to ask IVA questions?
