Big Loan Equals Big Savings?

Posted 2008-01-9

Taking out bigger rather than smaller loans could actually save people money, financial researchers say.

People should pay close attention to the tier size loans falls into, claim product research firm Defaqto

Higher interest rates tend to be placed on lower tiers, the firm said, adding 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.

 Defaqto principal banking consultant 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, but the savings could reach £1,000.

Defaqto advised consumers to “be on their toes” when loan hunting, as a large tier rate may not always mean uncompetitive rates.

Consumers can often get better deals by switching credit cards rather than sticking to their original one, Defaqto research also recently said, causing them to claim “credit cards reward disloyalty.”

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