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Loan laziness hitting borrowers’ pockets

Loan laziness hitting borrowers’ pockets

Category: Loans

Updated: 22/11/2010
First Published: 22/11/2010

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

People looking to take out a personal loan have been told they could save hundreds of pounds if they shop around for the best deal.

The call comes after research by Sainsbury's Finance found that a third of people who take out a personal loan opt for the first loan they receive a quote for.

More than half of people simply plumped for their own bank or current account provider when choosing a lender.

In addition, of these, 39% admitted that they did not look elsewhere for a competitive quote.

The average £5,000 loan from a current account provider costs £389 more than Sainsbury's Finance's market leading rate over a three year loan term.

However, with some high street banks charging as much as 26.9% APR for a loan of this size, the lender warned some borrowers could be paying as much as £1,404 more than they need to.

Older borrowers were found to be less likely to shop around for a number of personal loan quotes and more likely to opt for their current account provider's offering.

Those borrowers over the age of 65 obtained an average of just 1.8 quotes when looking for a personal loan, almost half the average of 3.3 quotes requested by 25 to 34 year olds.

Meanwhile, more than three-quarters (76%) of those over retirement age chose a loan from their day-to-day banking provider, compared to just 40% 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 at 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.

"For example, we give all our customers double Nectar points on Sainsbury's shopping and at our petrol stations which is the equivalent to 2% off their shopping."

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