Why is interest on personal loans soaring???

[RegMolehusband]

If interest rates are so low why is the cost of borrowing soaring? MSN Story. I always thought the interest rate on personal loans bore some relationship to the overall interest rate but clearly not!

[kambites]

Because they're high risk debt - the risk of people defaulting is higher than with other (secured) loans. Banks don't want high risk debt in this kind of economy.

Edited by kambites on Tuesday 30th December 10:17

[Blib]

I'm no expert, therefore I am eminently qualified to pontificate here on PH !

My guess is that banks are loath to lend money to anyone and so an individual is seen as a particularly risky proposition by them.