Ben Rawson-Jones, Tuesday July 15, 2008
Leading loan rates are becoming less attractive now that First Plus are pulling out of the debt consolidation market. Read on to discover why you need to act now to defy the credit crunch and find the best deal
First Plus, the UK's largest secured loan provider, has announced that it will pull out of the
loans market on August 9. This could have a huge impact on the debt consolidation market as First
Plus, which is part of Barclays, has been the leading player for some time and its competitiveness
has helped keep the rates offered by other providers down.
Homeowners looking to move existing debts onto a single low-rate loan must move quickly in
order to take advantage of First Plus' market-leading rate of 6.6% while it is still the cheapest
secured loan rate on offer. While the company will cease offering loans to new customers from
August 9, it will continue to service those from existing borrowers.
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Debt squeeze
The decision by First Plus to pull out of the market signifies just what an impact the credit
crunch is having on lenders and it is bad news for British consumers, who have collectively
accumulated more than £1.3 trillion in personal debt.
Many were able to manage when borrowing costs and inflation were low, but an increasing
number of homeowners are now struggling to service their debts. Not only are borrowing costs rising
because of the credit crunch, but households are also having to grapple with rising living costs.
First Plus' departure from the secured loans market will reduce the options available to
those who are finding it hard to make ends meet. This is why anyone considering moving all of their
existing debts onto a single loan should apply for a deal quickly, as they could get harder to come
by from next month.
Secured loans can be a good option for those with large debts - typically £25,000 or more -
as unsecured personal loans are not available for debts of that amount. However, if you opt for a
secured loan, you need to be aware that it will be secured against your property, so your home
could be at risk if you fall behind with payments.
It's important to remember that when applying for a loan, the rate you are offered will
depend on your credit history.. It is vital to apply only for deals you will be accepted for, as
applications that are declined have a negative impact on your credit score.
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cheapest loan deals on the market
The best secured loan rates (typical credit profile)
| Provider | Rate |
Monthly Repayment
|
Total Charge for Credit |
| First Plus* | 6.6% | £195.23 | £1,714 |
| Norton Finance | 8.9% | £205.44 | £2,326 |
| Ocean Finance | 9.5% | £208.12 | £2,487 |
Rates based on a 'fair' credit profile. *= exclusive to MoneySupermarket. Data sourced by MoneySupermarket on July 08, 2008.
