Thursday 17th of September 2009
Individual voluntary arrangement (IVA) help could push down the climbing interest rates of the personal loans taken out by Britons.
A report from uSwitch.com says that since the start of September, three unsecured personal loan lenders have hiked interest rates for new customers up by 1.2 per cent.
This means that on a £10,000 loan, people might have to fork out an extra £322 in interest.
When combined with other unsecured debt commitments, for example, a number of different personal loans, households may need to seek IVA advice to prevent them from falling further in the red.
An IVA can not only freeze the interest and charges of unsecured loans, but can also reduce debt by as much as 70 per cent, which could make debt less of a headache for cash-strapped consumers.
Louise Bond, personal finance expert at uSwitch.com, says: "As consumers struggle to make ends meet and manage their finances, loan providers are looking to offer the best rates to those whose financial behaviour they can closely inspect - which are their existing customers."
Consumers who juggle a number of personal loan commitments may be best relying on IVA help, rather than more credit as a financial crutch.
By Hayley Jones
- 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
- Information on IVAs may help consumers turn their backs on plastic
