Supermarkets - great for groceries, not for loans

Supermarkets - great for groceries, not for loans by ANDREW REGAN

According to the results of the latest car buying index from Sainsbury�s Bank, which is intended to track the number of people planning to purchase a car during a six-monthly period, there has been a significant increase in the number of people who expressed plans to finance a car purchase with the assistance of a loan between September 2006 and February 2008 compared with the previous six months. The findings show a massive rise of 230,000 people who are proposing to purchase a car before February; this is up by 11% compared with the previous 6 month report. Steven Baillie, loans manager at Sainsbury's Bank said, "Given this growing trend for car purchases to be funded by loans, motorists must make sure that they shop around for a competitive rate as they could save hundreds or even thousands of pounds in repayments". The advice for consumers to shop around and compare credit cards and personal loans in order to find the best credit card or loan deals, with the added emphasis on the need be careful in the present financial climate, is an important if slightly ironic one to bear in mind following on from a recent consumer report. Which? found that while some supermarket financial offers did provide consumers with a good deal, a number of the financial products offered by Britain's supermarkets and high street retailers are "downright expensive" and "distinctly bad value". Neil Fowler, editor of Which? magazine, said: "Just because supermarkets offer good value on groceries, don�t assume this applies across the board." The Which? survey found that, "Even the cheapest of the supermarket credit cards, Tesco Bonus, would cost �84 a year more than the Halifax card". The report also found that the situation was similar with the supermarkets loan offerings. "Borrowing �5,000 from Marks & Spencer would cost �348 more over three years than borrowing the same amount from the cheapest provider." With APR rates on a single 5 year �5000 unsecured loan ranging from 5.6% up to 11.9%, the difference in repayments can be as much as �841 (data source: Moneynet unsecured loan comparison), the need for consumers to shop around for the most competitive personal loan product on offer through the banks and building societies, rather than simply taking the first one, has never been more important. Disclaimer: All information contained in this article is for general information purpose only and should not be construed as advice under the financial Services act 1986. You are strongly advised to take appropriate professional and legal advice before entering into any binding contracts.

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