Consumers in the know can save more than £600 on the repayment charges for personal loans.
In January alone Britons are set to take out £4 billion in personal loans, MoneyExpert has revealed, and the organisation has issued advice to help consumers get the best deal they can.
"The difference in interest between a loan of £5,000 for example, can be as much as 8.1 per cent APR which over a period of three years would save you around £624.96 in repayments," Sean Gardner, chief executive, MoneyExpert explained.
"However, depending on your circumstances, you should not always go for the lowest headline rate as you could end up paying more. For example, you could face a penalty for clearing your loan early," he added.
Tips for consumers include being on the look out for penalties - as some loans charge for repaying early. MoneyExpert estimated that will affect 385,000 people in January alone.
Consumers are also advised to check if they need payment protection insurance on the loan. Insurance protection is often cheaper as a stand alone policy, rather than part of the loan.
Online loan options can be cheaper than applying in person, MoneyExpert adds.
Finally, it can be worth your while to take out a slightly bigger loan than required, as larger amounts can attract smaller interest rates.
MoneyExpert gives the example of a loan for £4,950, which could attract an APR of 12.5 per cent, which over five years would result in total repayments of £6,587.40. However, a loan from the same provider of £5,000, could charge an APR of 5.9 per cent, which over the same period would result in total repayments of £5,769.60.To compare personal loan deals, click here.
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