The loan rates banks are prepared to offer are becoming less competitive, according to independent financial advice website uSwitch.com.

In the light of recent increases in the loan rates offered by AA, Northern Rock and Moneyback bank, director of financial services Nick White at uSwitch has hailed the “end of the sub six per cent APR loan era”.

These three providers were previously among the most competitive personal loan providers – but they have all raised loan rates in the last few weeks.

For instance, AA financial services raised its rate from 5.9 per cent to 6.0 per cent APR, which means that a customer would typically pay an extra £26.39 in interest on a £10,000 loan over five years.

Mr White speculated that the launch of an Office of Fair Trading (OFT) investigation into payment protection insurance (PPI) could be behind the increased loan rates, since these providers stand to lose out on what has been a “very profitable” product – PPI.

“People that are planning to take out a loan in the next few months should act sooner rather than later in order to enjoy a sub six per cent APR before they disappear completely,” he advised.

For more information about the best loan deals, click here.

© Adfero Ltd