Unsecured loans; the lowdown

For customers looking for an unsecured personal loan, now may be an ideal time for them to take the plunge. Interest rates are often one of the most important factors in informing someone’s decision whether or not to take up a loan. There have been concerns about potential rising interest rates as a result of Brexit and it’s financial implications, but recent data has come out suggesting that 2017 has seen the lowest rates for unsecured loans in quite some time. From just the end of 2016, the average interest rate for an unsecured loan of £25,000 was at 5.5%, it’s since dropped to 4.9% in March 2017.  It’s also worth noting that this rate is just an average. Customers with a particularly good credit rating can secure even lower rates with some lenders.

Data released from the Bank of England last month showed the interest rate on a £10,000 unsecured loan dropped to 3.66% – the lowest since 1995 when records began. The Bank’s Governor, Mark Carney pointed to an easing of credit standards, record low interest rates and action by policy makers boosting post-Brexit vote lending as key factors in driving down consumer borrowing costs.

With record levels of low interest rates, this could be a great opportunity for someone to take out an unsecured loan and use it to pay off more expensive, smaller loans. This would be an easy, straightforward way of saving money in the long run by reducing the interest paid on the loan overall.

Other popular uses for unsecured loans are home improvements. More often than not, with such low interest, they end up being cheaper than buying all the necessary equipment for a home improvement job on store credit.

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