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Fewer Loan Choices

The impact of the credit crunch is being felt in the loans arena where the choice of cheap loans is getting smaller every day.

Many loan companies are being forced by the backers who provide their financing to reduce the risk levels on their loans and as such many are being forced to either increase the price of their cheapest loans or to remove certain products completely.

A review by the MoneyFacts website suggests that the choice of unsecured loans providers in the UK was reduced by around 10% in November. The latest casualty is Eskimo Loans, part of Northern Rock, who until the end of November provided unsecured loans up to the value of £25,000. But business has been stopped at Eskimo, their website no longer functions and simply refers people to a customer services telephone number. Eskimo join, GE Money, Leeds Building Society and others who no longer offer unsecured loans.

This choice reduction is not just limited to unsecured loans. For secured loans there have also been some cut backs with a small number of firms closing, but a greater number making changes to their product ranges.

Many have increased the price of their cheapest loans as well as enforcing tighter rules in terms of customer eligibility for products. Customers will now find stricter earnings requirements and property valuations as a feature of many loans.

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