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Borrowers urged to shop around

 Borrowers urged to shop around

Category: Credit cards

Updated: 01/02/2010
First Published: 01/02/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumers searching for a personal loan have been warned they must shop around for the best deal, after it was revealed demand for credit increased for the first time in six months in December.

The amount people borrowed last month through credit cards, overdrafts and loans exceeded the amount being repaid for the first time since June last year, according to the latest data from the Bank of England.

Low interest rates had been putting many consumers off from saving, with the money being used to pay off debts instead.

The news comes as research from Moneyfacts.co.uk revealed the interest rates payable on personal loans have reached a nine year high.

Despite base rate sitting at an all time low, lenders seem reluctant to offer loans to all but the most creditworthy of borrowers.

Given the recent hike in rates, Michelle Slade, spokesperson at Moneyfacts.co.uk, said that taking the time to evaluate the different deals on offer was imperative.

"With a £1,055 difference between the overall repayments on the cheapest and most expensive £5,000 personal loan, shopping around is key," she added.

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