Why are banks offering such expensive loans

I got a letter today from my bank offering me a car loan.

Now you would imagine that with interest rates at an all time low a need for banks to restart lending in order to kick start the economy, that bank loans ought to be cheaper than they were in the past. However the rate highlighted as the typically APR was 0.6% higher than the rate I could have got last year.

Is it any wonder that consumer spending is stalled and nobody wants to buy a new car when car loans are so much more expensive.


Pete (WestBrom Blogger) said...

No one wants a loan because we are already up to our ears in debt.

The idea that that there are millions of credit-starved Britons queuing up for loans that they cannot get by hook or by crook is, quite simply, ridiculous. According to the Credit Action website the average British household is now £9,600 in debt and, more tellingly, that figure increases to an astonishing £21,875 if the average is based on households who actually have some form of unsecured loan – an amount not much below the average wage. For the man in the street this really is a debt crisis – not a credit crunch.


Harry Hook said...

2 years ago... I paid off my credit card debt, with a loan at 6.9%. Today, same bank, same amount, same repayment period... the interest rate is an astonishing 17.9%. In 2006 the Bank Rate was 4.75%... Today 1.5%...
The words 'Bastards' and 'Thieving'
come immediately to mind.

Pete (WestBrom Blogger) said...

It couldn't be that the risk of default has significantly increased could it?

Bill Quango MP said...

Had a look at loans online. Filled in a form and took the obligatory phone call.
"10.8% rate"
"no thanks."
"OK bye."

Didn't even try to sell me anything..
now that defeatist attitude will keeps us all in recession until 2011.

modify loans said...

with that situation,I don't think it's good if you are applying for it when you are in debt.