Cheap personal loan price war erupts

There has been a sudden outbreak of violence on the high street as interest rates are slashed and a cheap UK personal loan price war has erupted.

Online loan comparison site moneysupermarket.com has witnessed a string of providers lower the cost of their loans in the last few weeks.

"A price war for loans has suddenly broken out which is great news for consumers looking for a low personal loan rate," said Stuart Glendinning, director of personal loans at moneysupermarket.

"Moneyback Bank has dropped its loan rate from 5.7 per cent APR to 5.5 per cent APR – the lowest in the loans market from any of the banks or building societies.

"Furthermore, Halifax and Bank of Scotland have slashed their loan rates from 6.4 per cent to 5.8 per cent APR – now the lowest rate from the heavyweight big brand banks.

"This follows on from recent activity from cahoot which has effectively topped the best buys for only two days at 5.6 per cent APR and AA which dropped the rate to 5.8 per cent APR from 5.9 per cent APR only last week."

"I have never seen such a frenzy of activity in such a short space of time. Providers are obviously aiming to get the year off to a good start - January is the biggest month of the year for loan applications as consumers look to consolidate debt and sort out their finances.

"The market is now awash with rates below six per cent APR. Speculation of a base rate reduction in the first quarter of this year may have spurred some of this competition."

But while cheap personal loans are good news for Britain's consumers, Mr Glendinning also issued a warning.

"Consumers need to be mindful that only those with an excellent credit profile will benefit from this competition which is the minority of adults in the UK," he said.

"Other customers with a poorer profile will find it more difficult to achieve the most competitive deals based on their circumstances."

To find a cheap personal loan, go to www.myfinances.co.uk/loans.htm