The AA has announced it is reducing its internet lending rate to 5.8 per cent APR on personal loans.

This new offer extends to all unsecured loans between £5,000 and £25,000. The AA claims that as such they are now the cheapest online provider of unsecured loans.

The general manager of AA Lending, Lloyd East says that the AA is raising its sights. He explains: “We are aiming to become a major player in the personal finance market and this 5.8 per cent rate underlines our determination to grow by offering market-leading rates for both loans and savings.”

As people gear up for the last few months of 2004, he says: “Christmas is approaching fast and most people promise themselves they’ll get organised in good time.”

Mr East added that now was a good time to get in shape financially: “Budgeting now and taking out a low-interest loan will help you avoid the credit card devastation that often ends up with a panic to consolidate in the New Year with the first loan that’s offered.”

It follows a survey carried out by the company, which found that almost two-thirds (61 per cent) of savers do not know what interest rate their account is paying.

As a result many are simply wasting money due to their confusion over their own finances.

To read more about unsecured loan deals, click here.