Expensive personal loans cost Brits £285m too much
Expensive personal loans cost Brits £285m
Monday, 29 Jan 2007 12:26
Britons are paying £285 million more than they need to by taking out expensive personal loans from high street banks.
That is according to new figures from Alliance and Leicester personal loans, which show borrowers could be paying up to £800 more than they need to in interest on a personal loan.
"We have known for a while that the big high street banks do not tend to offer the best deals, whether it is on current accounts, mortgages or personal loans," said Richard al-Dabbagh, from Alliance & Leicester.
"This research shows the staggering amount that people are overpaying for uncompetitive personal loans, and how much the big high street banks rely on borrower apathy and lack of financial understanding."
Personal loans from the larger UK banks frequently come with interest rates of more than ten per cent, however for people that shop around there are still cheap personal loans charging less than six per cent interest available (
full story).
"With many more people starting to feel the pinch and tighten their belts, a good first step is to look around for a good personal loan," said Mr Al-Dabbagh.
"It might only take five minutes, and could save you a hundreds of pounds. If you already have a personal loan, it can be worthwhile to switch your loan to a cheaper lender."
However, before deciding to switch to a cheap loan, borrowers have been warned to check the terms of their existing deal.
Nick White, of independent price comparison site uSwitch.com, commented: "Switching your personal loan can be good for your finances and significant savings can be made, but borrowers need to check the terms and conditions of their loan, as there may be elements of the contract that make switching a less cost effective option.
"These research findings highlight the amount of money some people are losing by sticking with an uncompetitive loan, so switching should be explored."