Repayment costs of personal loans are on the up, according to Defaqto.
Repayments for unsecured loans have become more expensive thanks to the credit crunch, it has been suggested.
According to new figures from Defaqto, the monthly cost of borrowing for personal loans has seen across-the-board rises since December 2006. This is despite the Bank of England's base rate of interest being at the same level (five per cent) then as it is now.
As a result of the financial crisis, banks have become much more cautious about extending credit to each other. This rise in inter-bank lending rates has been reflected in consumer credit rates, with many firms attempting to scare off high-risk borrowers looking for cheap loans.
Borrowing £2,000 over two years now results in monthly payments of £98.90, which is an increase of 3.2 per cent over 2006. Elsewhere, borrowing £5,000 over the same period now costs 0.8 per cent extra, while a £10,000 loan with payment protection insurance over four years has gone up by 1.6 per cent.
David Black, principal consultant of banking for Defaqto, said: "Lenders have tightened up their lending criteria and the rejection rate for unsecured loan applicants is higher than it has been in previous years."
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