CONSUMERS who take out loans from internet based lenders will save more if they borrow from a supermarket branded bank.
Long-term loans which are being offered online are promising fast ‘same-day’ payments with one company claiming to pay bank accounts within fifteen minutes of approval.
Some internet-based lenders demonstrate higher interest rates, and clearly state that money problems can seriously affect the ability to gain credit in future.
However, this doesn’t seem to affect the millions of people taking out loans in the UK, 8.2 million people took out a personal loan in 2012 according to the ONS.
The figure which is expected to be much higher suggests that there is a demand for borrowing money.
Internet-based lenders target their demographic with their online presence and TV campaigns, whereas supermarket branded banks advertise either online or in-store.
Below: graph depicting the Representative Example (total) interest rates of £2,000 borrowed over 18 month from six lenders. These figures have been calculated in accordance to each online website and accurately reflect interest rates dictated per lender. Out of all six long term lenders Tesco Bank, Sainsbury’s Bank and The Co-operative Bank had the lowest interest rates on £2,000 but Wilmslow based Savvy was one of the most expensive as well as Likely Loans and Buddy Loans cheaper yet still more expensive than supermarket branded banks.
Borrowing £2,000 from Savvy would mean the total repayable would nearly double the original loan amount at £3,999.78.
Likely Loans, whom charge 47.9 per cent would leave the consumer paying back £2,687.76. And Buddy Loans, charging just 0.2 per cent more than Likely Loans means the consumer pays £2,717.09 back to the lender.
The supermarket branded banks however were lower. The most expensive was The Co-operative Bank with £2,316.42 payable, followed by Tesco Bank at £2,271.24 and Sainsbury’s being the cheapest with £2,248.00 as the total cost.
That means that the difference between the most expensive lender Quays News tested, Savvy was still £1,282.69 more expensive than fifth cheapest, Buddy Loans.
The organisations mentioned have been contacted are yet to respond.