29 January 2007
Lack of knowledge about annual percentage rates (APRs) and borrower apathy are costing British consumers hundreds of pounds each month in personal loans, according to research from Alliance & Leicester.
Consumers' fiscal education flaws are proven by the fact that 23% of those polled by Alliance & Leicester admitted that they had used a store card to pay for Christmas purchases because they were offered at the point of purchase despite the sky-high APR rates attached to them.
Those who took out a loan from a typical high street bank in the last year with a 10% APR will fork out over £285 million more in personal loan interest payments than they would if they had a low rate loan from Alliance & Leicester at typical 5.9% APR.
At a time when personal loans with an APR of under 6% are becoming a dying breed, it's more important than ever before for consumers shop around to ensure that they are getting the best deal for their personal loans.
Richard Al-Dabbagh, Senior Personal Loans Manager at Alliance & Leicester, commented: "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.
"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."
Mr Al-Dabbagh advised consumers to look around for the most competitive deal, adding: "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."
© 2008 Adfero Ltd
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