Thursday 27th of August 2009
Britons who have recently taken out a £5,000 personal loan to see them through the recession are hit with the highest interest fees, a new survey shows, although an individual voluntary arrangement (IVA) could help those in thousands of pounds of debt.
Even though the base rate remains at 0.5 per cent, the average annual percentage rate (APR) of a £5,000 loan currently stands at 10.32 per cent, the survey by moneysupermarket.com shows.
Those who take out £10,000 loans will fork out 8.4 per cent APR, while households who take on a £15,000 loan will need to cover an 8.55 per cent APR.
High interest rates can cause a financial headache for some Britons, who struggle to not only pay the loan back but also keep up with the interest repayments. An IVA can, however, freeze this interest, which could give some households breathing space to repay their creditors.
"Despite the Bank of England slashing [the] base rate to 0.5 per cent in March, loan rates have continued to rise, leaving consumers paying through the nose for their personal loans," Tim Moss, head of loans and debt at moneysupermarket.com, says.
By Hayley Jones
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- 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
- IVAs could free you from credit card debts
