Those taking out a cheap personal loan in the current climate may be losing out because of high payment protection insurance (PPI) costs, new research has revealed.
Conducted by the University of East Anglia's (UEA) Economic and Social Research Council, the report claimed that lenders have achieved low personal loan rates through pushing up PPI premiums.
Among the 211 £5,000 personal loans looked at during the research, repayments were typically £162.37 a month without PPI and £186.75 with insurance included, which would add up to nearly £300 over the course of 12 months.
Dr John Ashton, a UEA lecturer in banking and regulation, explained: "Consumers shop around on the loan rates, not loans and insurance. And strong sales techniques meant those less confidence or knowledgeable were led to believe the insurance was normal."
Pierre Williams, head of research at Moneyexpert.com, recently said that personal loans are now coming with hefty levels of interest and it will be hard to find deals anywhere near the all-time low base rate .
Cheap personal loans come with increased PPI charges
Cheap personal loans come with increased PPI charges
Thu, 10 Sep 2009
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