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Bigger loans 'may save money'

Taking out a loan can save people money depending on the size of the tier that the loan falls into, according to Defaqto.

Higher interest rates tend to be placed on the lower tiers, the financial researcher has claimed, adding that people may end up paying more for a lower sum of money, especially when loan providers have two tiers in the range of £1,000 to £5,000.

Commenting on the research, Defaqto principal consultant of banking David Black said: "Borrowers should take care when choosing the size of loan they want, as a little effort in researching the interest rates charged on different tier levels could save them a considerable amount of money."

Taking out a bigger loan may mean paying it off over a longer period of time, but the savings could be as large as £1,000.

Defaqto have advised consumers to "be on their toes" when it comes to looking for loans, as a large tier rate may not necessarily mean uncompetitive rates.

Consumers are often able to get better deals by switching credit cards than sticking to their original one, Defaqto research recently revealed, causing them to claim that "credit cards reward disloyalty".

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© Adfero Ltd

09/01/2008 12:22:24

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