One third of people who take out personal loans do not shop around, instead taking out the first
loan they receive a quote for, according to research by Sainsbury's Finance.
Additionally, 54 per cent of people chose their own bank or current account provider when choosing a lender and of these, 39 per cent did not look elsewhere for a competitive quote.
Sainsbury's Finance is warning borrowers that this apathy could cost them dearly - the average £5,000 loan from a current account provider costs £389 more than the market leading rate from Sainsbury's Finance over a three year loan term, although Sainsbury's Finance says the difference could be as much as £1,404, as some high street banks charge 26.9 per cent APR for a loan of this size.
The research also found that older people are less likely to shop around for a number of quotes. Over 65s obtained an average of 1.8 quotes whilst the savvier 25 to 34 year olds obtained almost twice the number of quotes before taking out a loan (3.3 quotes).
Older people are more likely to turn to their current account provider. More than three-quarters of over-65s (76 per cent) opted for a
loan from their day-to-day banking provider compared to just 40 per cent of 25 to 34 year olds.
"Given the increase in number and popularity of price comparison websites it's surprising that so many people still go straight to their high street bank without comparing deals said Steven Baillie, Head of
Loans, Sainsbury's Finance.
“There are many deals to be had but you simply won't know how much you can save until you shop around a little. The difference in price between the most competitive loans and the rest of the market can be literally hundreds of pounds, and that's before you take any rewards that providers may be offering.”
|
Lender
|
APR Typical
|
36 monthly repayments of
|
Total amount repayable
|
Savings over 36 months
|
|
|
|
Sainsbury's Finance
|
8.6%
|
£157.33
|
£5,663.88
|
|
|
|
|
Santander
|
8.9%
|
£157.97
|
£5,686.92
|
£23.04
|
|
|
|
Royal Bank of Scotland (Existing customers)
|
12.9%
|
£166.57
|
£5,996.52
|
£332.64
|
|
|
|
NatWest (Existing customers)
|
12.9%
|
£166.57
|
£5,996.52
|
£332.64
|
|
|
|
Barclays
|
26.9%
|
£196.63
|
£7,078.68
|
£1,414.80
|
|
|
|
|
|
|
|
|
|
|
|
All figures based on £5,000 over 36 months.
Competitor rates: source Moneyfacts.co.uk - the comparison site you can't afford to ignore 08/11/10.
|
|
Competitors quoted may offer lower rates to existing customers, internet or telephone applications or for larger loans.
|
|
Find out the the latest loan news by receiving our
MoneyMaker newsletter.
