Loan costs increase due to PPI

According to some industry officials the costs relating to personal unsecured loans have been rising as a result of a crackdown on PPI, or payment protection insurance, leaving lenders to look at other ways to try and recoup the money being lost through a reduction in PPI sales. Officials have said that many lenders have been hiking up the rates and costs with unsecured personal loans since financial authorities started clamping down on the sale of PPI.

Another factor that is resulting in higher rates of interest and costs relating to unsecured loans is that many lenders are trying to cut back on the amount that they lend in light of the current difficult financial situation, and increasing rates and costs has provided them with the ability to do this to some degree. Some lenders are thought to have increased their rates by up to 1% over the past few months.

The increase in interest rates on unsecured loans means that many people will end up paying higher repayments when they take out an unsecured loan now compared to if they had taken one out several months ago. This has made it even more important for consumers and borrowers to look around and compare different financial products before making a decision, as the rates and the monthly costs on personal loans can vary quite dramatically.

Industry officials have said that whilst a number of major lenders have increased their rates in order to try and claw back lost revenue stemming from the PPI clampdown there are still some lenders that are offering competitive deals, so consumers with good credit can still get an affordable loan by looking around.