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Cost of personal loans on the rise

Interest rates on personal loans are rising fast, thanks to five interest rate rises since last summer and the global credit crunch, according to Moneyfacts.However, with more people looking to borrow because of pressure from mounting living costs, consumers are being urged to shop around for the best possible rate."This week loan rates have taken a real battering, with a total of nine providers hiking interest rates on some tiers by up to four per cent," said Moneyfacts analyst Lisa Taylor. "The last nine months has seen a steady increase in the rates available for unsecured personal loans, only four months ago sub six percent rates were available, whereas today you would be hard pushed to get your hands on a rate of less than 6.9 per cent." She added: "Don't assume a personal loan is always the best method for refinancing or making purchases on credit. There are still some great zero per cent deals to be found in the credit card market, with up to 15 months' zero per cent on purchases and balance transfers, but these only make financial sense if you are looking for short-term borrowing."Rate tarts have also been warned that switching deals was set to become harder over the coming months, particularly for those with a poor credit rating, as lenders begin to err on the side of caution.

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