Unsecured loans: how times have changed

We've all seen the best buy tables but what's happened to the consumer who takes out the ‘average' product?

We've compared the ‘average' deal now across a range of unsecured loan amounts and periods with the ‘average' deal available last time the Bank of England base rate was also at 5.00%.

David Black, Principal Consultant of Banking for Defaqto.com says: "Lenders have tightened up their lending criteria and the rejection rate for unsecured loan applicants is higher than it has been in previous years with Nationwide reporting that they're now declining about 60% of applications. Many lenders' annual reports now say that they're focussing on the acquisition of better quality business."

"Looking into the future I do expect to see the pressure on Payment Protection Insurance sales and costs manifest itself in higher interest rates being levied on unsecured loans as lenders lose some of their ability to cross-subsidise loan rates with earnings from PPI sales."