15 September 2005
Research from the Citizen's Advice Bureau into loans insurance scams, and the announcement by the Office of Fair Trading that it will be investigating the matter, has led to calls for loans customers to shop around to get the best deals.
A report from Moneyfacts says that in light of the news, it is now just as important to check the value of insurance payments you make for your loan as it is to check the interest rate on it.
Some estimate that prices on insurance can vary by up to 200 per cent, while Moneyfacts says that borrowers could save or lose £1200 on a loan just by switching.
Samantha Owens of Moneyfacts.co.uk said: "Insurance can be invaluable, for example, should a borrower be unable to meet monthly repayments due to ill health.
"Don't be bullied into taking a lender's insurance. A low loan rate may not necessarily mean the lowest cost for insurance and you may well find better cover at a lower cost from an independent insurance provider.
"Also, if check if a lender's insurance premium is added to the loan at the outset. If so, you will pay interest on it until the loan is repaid. Go for cover that allows you simply to pay a monthly premium."
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