Cheap loans despite high interest rates
Traditionally, the amount you pay back on your loan has always been determined by the current rate of interest i.e. as base rates increase, so does the overall cost of your loan. However according to recent research, the overall cost of loans has actually decreased, even though interest rates are at an all time high?
Accordingly, certain loan plans are cheaper now than they were 5 years ago. Lenders are offering consumers exceptional value for money, making cheap loans available even though the gap between loan rates and the national base rate is miniscule. Although it could be deemed illogical, it would appear that certain lenders are willing to price their plans below base rates as a means to better compete in an aggressive market place.
The current base rate stands at 5.5%, the markets best loan plan available currently offers an APR of 5.9% which is a difference of just 0.4%. Faired against the best loan deal 5 years ago the rate difference represents a drop of 2.55%.
For lenders, the decision to go against the economy means thinner margins, for consumers the move equates to fantastic value for money and an ability to attain cheap loans, when ordinarily they wouldn’t be available.
