Personal loan rates under scrutiny

Tue, 07 Feb 2006

More than half of Britons who applied for a personal loan claim they did not receive the interest rate that was advertised by the personal loan provider, a new survey shows.

A total of 52 per cent of those polled said they were charged a higher annual percentage rate (APR) on their personal loan than what they thought would be the case, financial website Moneyfacts revealed.

The website's editor Emma Butler says that 66 per cent of consumers are supposed to qualify for the advertised APR on personal loans.

However, she points out that the Moneyfacts survey shows that only 48 per cent of consumers actually did qualify.

"There is no mechanism currently in place to ensure that these rules are being followed and these results highlight that some form of auditing is required to prevent lenders breaking these rules and potentially misleading consumers," Ms Butler comments.

Steven Baillee, a spokesperson for personal loan provider Sainsbury's Bank, says consumers have "embraced the change in the lending market".

He says consumers now have increased choices and explains: "They can look at who is out there, who is advertising and compare their offers."

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