Personal loans could be more competitive

Financial Services > Personal Loans > News

Tue, 18 Oct 2005

Britons planning to make improvements to their homes or lifestyles are being warned against 'point of sale' financing.

Alliance & Leicester warns that those considering improvements like the purchase of a new car or installing a new kitchen stand to lose out financially if they fail to shop around for the best loan deal.

Believing that signing up for credit at the point of sale offers a competitive deal, 36 per cent of customers could be paying too much.

The average interest rate offered on credit by companies installing double-glazing is 20 per cent, Alliance & Leicester found.

Kitchen retailers and installers of conservatories charge an average interest rate in excess of 15 per cent, with car financing schemes charging 13.3 per cent.

The personal loan provider points out that with personal loans offering interest rates as low as 6.6 per cent, customers could save more than Ł5,300 in interest payments.

Those who are already tied to a 'point of sale' credit deal should consider switching their debt, the head of personal loans at Alliance & Leicester suggests.

Andy Bayes continues: "It is quick and simple to do and will rid people of their double-digit interest rate, and replace it with a much more affordable low-rate loan."

Knock-on costs to things like home improvements could also easily be funded by flexible personal loans, he added.

"There is nothing worse than leaving something unfinished because you can't immediately afford the additional cost – this is more likely if you are paying well over the odds for expensive finance," Mr Bayes concluded.

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