Million Of Britons Losing The Right To Prime Interest Rate Loans
Recent moves by UK loan lenders to tighten up their credit policies now means that if you fail to make even one loan repayment on time this will likely result in you losing your good credit rating. For millions of us losing our good credit rating will result in us losing the right to prime loan rates, causing us to incur additional costs and expenses if we want to borrow money in the future.
If you’ve not heard of the term “prime loan rates” before, basically this is the standard bank interest rate that most lenders will charge on a loan if you have a good credit rating – for example, the rate you normally see advertised in the bank or on the bank’s website. However, if you have a bad credit history, because you have previously failed to make a loan repayment on time, then banks won’t generally offer you this lower rate of interest on your loan. Instead, now that you have a bad credit history, you’ll need to apply for what are known as “sub-prime”, “near-prime” or “light-prime” loans, depending on how bad your credit history is, which will undoubtedly cause you to incur much higher costs when borrowing money.
With most “sub-prime” loan interest rates being approximately 3% higher than the rates of interest being charged on prime rate interest loans, these higher costs for borrowing money can run into the hundreds, if not thousands, of pounds. It is also likely that the charges associated with borrowing from a sub-prime loan rate lender will be higher than any you can find with a prime interest rate loan lender.
With an estimated 9 million people in the UK having been refused prime interest rate loans in 2005, thereby forcing them to apply for sub-prime interest rate loans, the significance of this overall shift in applying the credit policy rules by UK lenders cannot be under estimated.
As a result, if you currently have a good credit rating, making sure you try and keep this status becomes vital if you want to keep you interest rate costs down to a minimum. If, on the other hand, you are one of the unfortunate millions of Britons who have unwittingly now lost their right to apply for a prime interest rate loan, making sure you take the time to check around and apply for the best alternative interest rate loan has just taken on a new significance if you want to stand any chance whatsoever of significantly decreasing the cost of borrowing money in the UK today.
Either way, if you are a borrower in the UK today, you can no longer assume that just because the bank is advertising a special interest rate on a loan that this will apply to you.
All of this means that before you apply for a UK loan, you should always carry-out a credit rating check to make sure that your credit rating is correct and up-to-date.
3rd August 2006