Budget & Saving

Borrowers 'not comparing loan deals' and paying an extra 1,400 pounds

Borrowers are costing themselves hundreds of pounds by failing to shop around for the best loan deals, a survey has shown.

Research from Sainsbury's Finance found that 54% of those questioned had simply taken out their personal loan from their current account provider, while another 33% had accepted the first quote they were given.

Older people were found to be the most likely to use their existing bank. Around 76% of over-65s took loans out from their current account provider, compared with just 40% of those aged 25-34.

But the group warned that this apathy was costing people hundreds of pounds in extra interest.

Some borrowers were found to be paying up to £1,400 more over three years for a £5,000 loan they had taken out from their current account provider.

On average, borrowers were found to be paying £390 extra for such loans compared with the leading market rate.

Steven Baillie, head of loans at Sainsbury's Finance, said: "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."

ICM questioned 2,000 people during October.

Sam Jackson

Money Dashboard