Borrowing more could be cheaper

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Borrowing more could be cheaper

Taking out larger loans could actually work out cheaper for consumers in the long term, according to new research conducted by the consumer finance site Find.co.uk.

Relating to the personal loans market, Find.co.uk discovered that in general, it was the lowest tiers of loan that required the largest repayments in terms of rates.

By borrowing £4,950 from Co-operative Bank, the customer is required to meet an APR of 16.9 per cent, however, by adding an extra £5 to the loan, the APR was found to fall to 6.9 per cent.

This happened with other loan providers such as Direct Line Personal Loans, where an extra £5 borrowed resulted in a saving in excess of £1,000.

Kate Marsden, marketing director of Find.co.uk, 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."

For customers to play it safe in the loans market, they should look for a standard interest rate, according to Ms Marsden.

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