Lenders are scrambling to slash the interest rates on their cash loans ahead of a rumored drop in the Bank of England’s base rate that is supposedly looming on the horizon.
The 6 per cent interest rate ceiling has come crashing down lately when it comes to personal loans. Over the past few weeks, Sainsbury’s Bank, Tesco Bank, and Derbyshire Building Society have all come forward with either 5.9 per cent or 5.8 per cent interest rate loans.
Of course, slashing interest rates doesn’t help much if you’re not lending to those in need. Many of the UK’s worst off – people who can’t qualify for such an excellent interest rate because of a poor credit record – are stuck having to take out no credit check payday loans instead.
These payday lenders feature eye-watering APR interest rates as high as 4,000 or 5,000 per cent sometimes, with their saving grace being that they are designed to be repaid in full in around a month before the interest climbs too high. However, with so many British households struggling because of the poor economy, it’s become harder and harder to repay these loans before incurring massive late fees and exorbitant roll-over charges – all because traditional lenders’ criteria are too high to loan to the down-and-out.
However, there is a silver lining: those in need can turn to a credit union instead of a bank or building society for a personal loan. Rates on these loans are quite competitive, and credit unions will work with a borrower to promote healthy financial choices, including beginning to build a savings pot for the future.