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Customers 'should not settle for the first loan they are offered'

By Sarah Engle, Mon 18 Aug 2008 - Published in Loans

Brits need to compare loans rather than settling for the first deal they come across according to Moneyfacts.

This comes after research by the group found that a number of lenders increased rates on personal loans last month.

Michelle Slade, analyst at Moneyfacts, said many people were simply going straight to their bank without considering the full range of options.

She explained in the past few years the market for personal loans has been "extremely competitive".

However, Ms Slade said that had changed and since August 2006 the average rate on offer for a £5,000 loan over three years had increased by approximately three per cent, from 8.1 per cent to 11 per cent.

She warned: "With no real signs that conditions are going to get better in the near future, rates could get much higher yet."

Meanwhile, Alliance & Leicester claimed recently that personal loans can prove more cost-effective than store cards.