Nationwide has become the first personal loan provider to introduce a summary box, allowing customers to see personal loan deals at a glance.The decision to introduce the summary box follows mystery shopper research of the major UK personal loan issuers, which revealed that borrowers often have no idea of the loan rate they will be offered until they have received a credit score.With the Nationwide summary box, consumers will be able to see exactly what the true cost of the loan will be at the time of application - avoiding the accumulation of credit scores which can make it harder for them to be accepted by loan providers.Details of the interest rate a customer will be offered if they are accepted, how much they will be lent and for how long, and arrangement and early redemption charges are all included in the summary, as well as example costs of loan repayments and payment protection insurance, if applicable.”There is too much confusion and lack of transparency for consumers taking out a personal loan,” said Stuart Bernau, executive director of Nationwide. “It is up to the industry to be fair and give clearer information to enable customers to make a decision. “If the industry adopted Nationwide’s lead, it would highlight some of the extortionate rates people currently have to pay for personal loans. This will lead to more consumers getting a better deal.”

New research from Abbey shows that 40 per cent of UK homeowners have switched lenders to obtain a better deal at least once in the last five years.The survey suggests that most people remortgage in order to access a better mortgage rate and reduce monthly payments (66 per cent)., while others did so to borrow more money against the property (19 per cent), and some to obtain a mortgage with more features or flexibility (eight per cent). Just two per cent of those who said they had switched lender did so because they were unhappy with their existing company.Gary Hockey-Morley, Abbey’s director of mortgages, said: “More and more people are now re-mortgaging to help them change their lifestyle or career and to own their own home quicker, not just to reduce their monthly repayments.He added: “I’d urge anyone considering changing their mortgage to talk to lenders, like Abbey, who have deals that offer free legal and valuation fees as well as good rates.”Of those people who have not previously, just under two thirds (65 per cent) said they would consider doing so this year, with four per cent saying they would use remortgaging as a way to start a new business, or give up work and take time out, or start a family.

British borrowers owe the most on car loans after mortgages, according to a new survey commissioned by the Department of Trade and Industry (DTI).The MORI survey found that individuals owe an average of £5,869 on car loans, the highest debt after mortgages and greater than personal loans (£5,270), government student loans (£5,165), bank loans (£4,815), hire purchase (£3,270) and loans from friends and families (£2,663).
Despite these large repayments, the survey found that the vast majority of people in Britain are not concerned about meeting their debt repayments.Those who are typically struggling with their debt repayments are young parents in their 20s and 30s, living in rented accommodation and earning less than £9,500 a year.Only five per cent of the borrowers surveyed considered their household’s borrowing repayments a heavy burden, and just four per cent have been in arrears on credit commitments and domestic bills for more than three months.”Over-indebtedness can cause huge problems for individuals, which is why we are currently working hard to minimise the number of people who become over-indebted, and improve support for those who have fallen into debt,” said consumer minister, Gerry Sutcliffe. “However, it is encouraging to see that, despite an increase in consumer borrowing, the percentage of those who find their debts unmanageable is still relatively small.”

New rules on lending came into force yesterday, guaranteeing customers a new level of clarity on their loan agreements.Lenders are now required to be clearer and more specific about the main factors of the loan before borrowers enter into the contract, setting out terms such as total amount borrowed, total amount repayable, amount and frequency of repayments, and APR charges.This same information must now be displayed prominently on the loan agreement itself, which must contain separate information about any additional payment protection insuranc.”Hidden payments and lack of clarity are very unhelpful for people trying to manage their credit commitments, which is why we’ve brought in these changes,” said consumer minister, Gerry Sutcliffe.”The pre-contractual information will help people shop around and make informed choices between the different products available to them, and the new level of clarity on loan agreements will mean that no-one is in the dark about what they are signing up for.” New rules also came into effect yesterday requiring that borrowers who wish to settle early are given a fair deal.The National Consumer Council welcomed all aspects of yesterday’s new legislation.”With debt now affecting a wider spectrum of people - including the better off - and personal bankruptcy figures on the increase, these new obligations on lenders are extremely welcome,” said Claire Whyley, deputy director of policy at the National Consumer Council.

Rip-off finance deals could turn your dreams of a new kitchen into a hellish nightmare, Alliance & Leicester Personal Loans is warning.With new research indicating that more than 20 million Britons are looking to update their kitchen in the near future, or having done so since 2000, Alliance & Leicester states that a collective £1.2 billion is being wasted on uneconomical deals.More than a quarter (28 per cent) of those installing a new kitchen, at an average cost of £6,000, take out personal loans to cover the costs, but many kitchen dealers finance deals charge interest rates that run into double figures.”The devil is in the detail for those taking hellishly expensive kitchen dealer finance, which will probably end up burning a large hole in their pockets,” said Ash Mukadam, personal loans manager at Alliance & Leicester.By taking finance from a kitchen dealer at an average APR of 15.2 per cent over five years, consumers would pay £2,425 in interest - more than double the interest payable on a low-rate personal loan such as that offered by Alliance & Leicester at 6.4 per cent.”What is surprising is that people do not appear to put as much effort into looking for a good rate of finance as they put into the style of their cupboards or the colour of their worktops,” Mr Mukadam added.”With the approaching Bank Holiday weekend being a time people sign up to home improvement deals, it is extremely important that they shop around for finance or risk putting their finances in expensive limbo for the duration of the loan.”

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.

Shopping around for the best personal loan is not as simple as it should be, according to a survey by Nationwide.The building society’s recent mystery shopping study found that in 41 per cent of the calls made to major financial institutions, mystery shoppers could not find out the loan rate that would apply to them.A range of excuses was offered for this withholding of information. More than a third (38 per cent) of those refused a quote were told they would have to open an account first, whilst a quarter (25 per cent) heard that they could not receive a quote unless they took out the loan during the call.
According to Nationwide, such refusals to offer an informed quote combine with the difficulties in credit scoring and loan applications to make taking out a personal loan unnecessarily difficult.”The findings are very disappointing - so much for transparency in financial services,” comments Stuart Bernau, executive director at Nationwide.
“My advice to those shopping for a personal loan is to look for a provider, like Nationwide, which puts consumers’ interests first.” Unlike most other lenders, Nationwide offers the same rates to all its personal loan customers - currently 6.7 per cent APR.

According to the Citizens Advice Bureau (CAB), customers should be wary of companies who charge an upfront fee for arranging a personal loan.Despite The Office of Fair Trading launched “Scams Awareness Month” this year, which it used to draw people’s attention to dishonest practises in the loans industry, there has still been an increase in the number of people caught out.Customers are drawn in by low rate loans then asked to pay an “arrangement” fee for a loan that never materialises.CAB has warned that even when clients receive a loan from these dishonest companies, it is frequently at a higher interest rate than advertised or it is less than the amount that they applied for in the first place.A loan customer’s statutory rights enabled them to claim back the upfront fee, even if one was found for them and they turned it down.”Even if the company offers you the loan and you decide not to take it, or if you receive a loan and they give you less money than you asked for, you are entitled the money back,” a CAB spokesperson said.”If you do not receive your money back, this is a breach of your rights and you would be entitled to pursue the company and take them to court.”

Consumer comparison website MoneyExpert.com has warned that due to “time pressures”, many consumers are paying over the odds for motor loans.Car dealer financing is typically much more expensive than a loan from an independent supplier but is not as convenient for the consumer because of the time it takes to shop around for the best deal.Although people are now beginning to realise the benefits, shopping around is sometimes impossible due to the “time pressured” ways of modern life.”People are keen to shop around, but some haven’t got the time,” PR and communications manager for MoneyExpert.com, Alexander Cowen-Wright, said. “There are still a lot of people out there who could save money [but] people are time pressured and surfing the internet looking at rates from different companies takes time.”Mr Cowen-Wright added that despite the ease of comparison that the internet offers, the process still took longer than some people were willing to spend in order to save money when taking out a loan to buy a car.

Online comparison website uSwitch has said that despite the fact high street banks are offering higher rates for loans than internet-based specialist lenders, this may be a trend that is unlikely to change.Borrowers are concerned that if they go elsewhere for a loan and are rejected it could leave an indelible mark on their credit record, the website claims.Customers in general prefer what is comfortable for them, which could be something as simple as speaking to someone in their local branch whom they recognise.”Some people don’t want to risk the embarrassment of being turned down,” said Nick White, head of personal finance at uSwitch.com. “If there is a doubt in your mind about being accepted for credit you may turn to the high street.”In general, consumers feel more comfortable talking to a bank they have dealt with for years, Mr White said.”There is probably a feeling that you are more likely to get accepted by your bank,” he continued. “There are worries about what [being rejected for a loan] will mean for their credit record.”Research from the same website shows that high street lenders may be charging double the rates of their competitors and so may not offer the same financial, rather than psychological peace of mind.