It may be more cost-effective to take out a larger loan, one independent price comparison website has suggested.

According to MoneyExpert.com, rates on unsecured loans have increased by up to one per cent over the past half-year, despite three base rate cuts being implemented by the Bank of England during the same period.

The website is pointing out that those consumers who do not get their credit applications rejected may find it cheaper to take out a bigger loan.

Sean Gardner, founder of the website, commented that the unsecured loans market is hampered by availability more than rates.

"And you will pay lower rates on average if you borrow more. Lenders take the view that those borrowing more are generally a better risk than those borrowing less and offer better deals as a consequence," he added.

Tim Moss of moneysupermarket.com predicted at the beginning of 2008 that secured loans would emerge as a popular source of credit over the course of the year.
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