13 September 2006
Price comparison and switching website uSwitch has commented on the practice of tiered personal loan rates.
Research by uSwitch has shown that 540,000 people who took out personal loans for less than £5,000 in the past 12 months have been paying exorbitant interest rates of up to 19.9% APR.
The research states that tiered rates are a practice used by lenders to offer lower interest rates for larger loans and higher ones for smaller loans – a problem that can be compounded when borrowers take small loans over five-year periods.
Nick White, uSwitch head of personal finance, said: "Loans are undoubtedly the most cost effective option where a customer is looking to borrow large sums of money. However, with only a few exceptions the rates remain highly uncompetitive on small loan amounts.
"People really need to shop around when they are looking to borrow less than five thousand pounds and make sure they are not enticed by headline grabbing rates that are only available on larger loans."
Make a personal loan comparison with uSwitch.com and find the personal loan best suited to your needs.
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