Anyone taking out a personal loan should always remember that they should only borrow what they need and what they can afford to pay back. It can be tempting to take out a loan for as much money as you can but this is the sort of decision making that has led to many people ending up in a bigger financial hole. There is a need to be responsible when it comes to your finances but with a number of companies offering personal loan increases, it is easy to see why this can be a challenge for a lot of people.

The thing is, the reason so many people are in financial difficulty these days is because lenders allowed people to borrow so much money. Okay, it is not as if a borrower had a gun to their head to take out more money but when personal loans are made so easy and made to sound so appealing by the lenders, you can see why so many people decide to take out money that they don’t always need.

Do you really need personal loan increases?

This is why the news that personal loan increases are on the up should be considered to be a negative. One company that has released information about a super-sized loan is First Direct. They are looking to loan sums of up to £50,000. There is no need to secure this size of money against property and borrowers will not be subjected to mortgage style applications.

The previous limit imposed by First Direct was £30,000 and the new sum jumps ahead of the ceiling of lenders like Tesco, which was set at £35,000 and Sainsbury’s who had a limit of £40,000. However, it should be noted that these personal loan increases come at a cost and the typical rate for these loans will be 6.7%. This is higher than the average interest rate associated with a mortgage and is more than double the level First Direct applies to personal loans below £30,000.

If someone was to borrow a full sum of £50,000 and spread the payments out over the longest available term, which is a period of 7 years, the repayment sum every month would be £743.45. Personal loan increases may seem like a positive step but you need to consider if it is the right move for you. For some people, this is the last thing they need.