Myths surrounding personal loans are currently costing borrowers as much as £650 million in unnecessarily high rates, according to Sainsbury's Bank.
Research from the bank indicates that more than a third (34 per cent) of those intending to take out a personal loan believe they have to bank with an organisation in order to borrow from them.
This myth helps to explain why 67 per cent of those who have taken out a personal loan since 2000 chose their own bank or building society, despite the fact that these high-street organisations often do not offer the best rates.
Apathy about shopping around for a personal loan can also cost borrowers dearly - 38 per cent of the borrowers surveyed by Sainsbury's Bank obtained just one quote for their loan.
"Sadly, many people don't shop around when taking out a personal loan and this can cost them thousands of pounds in excess payments," said Rachel Brereton, loans manager at Sainsbury's Bank.
"Around 38 per cent of people obtain one quote when taking out a personal loan and a further 13 per cent only compare two quotes. By shopping around, you could reduce the APR on your loan by over five per cent and save over £1,300 in repayments."
Sainsbury's Bank estimates that the 2.8 million people who are likely to take out personal loans this year will collectively pay more than £650 million too much over the lifetime of their loans because they failed to shop around for the best deal. Click here to find out more about personal loans.
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