Shop around and save on loans
The Irish Financial Services Regulatory Authority (IFSRA) found one-year variable rate loans of €2,000 could cost up to €250 euro more with certain institutions.
Out of all the financial institutions surveyed, AIB emerged as the cheapest for one-year personal loans of €2,000 euro. The total cost of credit for a one-year variable loan with AIB was €92.20 compared to €111.76 with Bank of Ireland and €116.68 with Permanent TSB.
Tesco Personal Finance was the cheapest for a three-year fixed loan of €6,000. The loan’s total credit cost was €822.90 compared to €1011.36 for a loan with Bank of Ireland.
The cheapest 10-year fixed loan for €10,000 was available from National Irish Bank.
The survey by financial watchdog IFSRA did not include credit unions, who only provide quotations to their own members.
IFSRA consumer director Mary O’Dea said consumers should not automatically take out a loan with their own financial institution.
“This survey demonstrates the value of taking the time to examine closely the costs of personal loans,” she said.
She advised consumers to pay off personal loans in the shortest possible time.
“A €5,000 fixed rate loan will cost you almost €300 euro more if you repay it over three years rather than two years,” she said.
Most financial institutions offer payment protection insurance for personal loans to cover for redundancy or illness. But IFSRA warned the cost of this insurance could be prohibitively expensive for people who already have secure jobs or health insurance.
The cost of payment protection insurance for a €10,000 loan over five years ranged from €1,000 to more than €2,000.
Ms O’Dea said: “People should be aware that lenders often include payment protection in the quote you get for your loan. Always ask how much the loan will cost without payment protection.”
IFSRA is running a series of television ads, featuring a couple talking in financial jargon, to raise awareness of personal finance issues.
Responding to the IFSRA findings, Fine Gael Deputy Leader and Finance Spokesman Richard Bruton called on the Government to start clamping down on excessive profiteering by financial institutions.
He said previous IFSRA surveys had shown customers could save a massive €7,200 per year by shopping around for house insurance (savings of €340); car insurance (for a 28 year old male €1,360); credit cards and personal loans €400, deposit Account €390 and mortgage €4,500.
