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One in three miss out on personal loan

13 October 2004

One in three UK consumers (35 per cent) overlook the rate of interest they will be charged when choosing a personal loan, new research reveals.

A survey by Alliance & Leicester found that a third of consumers admitted that they did not look at the annual percentage rate or 'APR' when choosing a loan.

The bank has warned borrowers that they could end up paying twice the rate they need to.

Of those who said that the rate of interest was not their top priority, 37 per cent thought all banks' loan rates are similar, one in five (19 per cent) confessed that they did not fully understand APRs, and 13 per cent thought a couple of per cent would not make much difference to the cost of their loan.

Andy Bayes, head of personal loans at Alliance & Leicester, said: "While two out of three people rightly focus on the rate of interest when choosing a loan, there is still a large number of people who pay over the odds by not giving it their full attention."

He added: "Arranging a loan through the bank branch where you hold your current account may once have been the easiest way of arranging a loan. However, the telephone and internet has made it much easier to shop around and make sure you are getting a competitive deal on your loan."