Loans under 6% becoming 'extinct'

Loan interest rates less than six per cent are close to extinction, a consumer organisation has stated.

Michelle Slade, personal finance analyst at Moneyfacts.co.uk, has commented that the increasing number of individual voluntary agreements made over the last two years has seen lenders become more cautious.

As a result, there is a lack of loans between £5,000 and £15,000 given with an interest rate below six per cent, she added.

The rise of the zero percent credit card has also contributed to the decline of traditional personal loans, the expert remarked, but that does not mean that good deals are no longer available to those who shop around.

"Make sure you do your homework before signing up. Remember it does not always pay to remain loyal to your current account provider," she said.

According to money charity Credit Action, there is a combined total of more than £1.25 trillion in personal debt in the UK.

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