Consumers are throwing away up to €800 in interest payments by not shopping around for personal loans, according to a new survey by the Irish Financial Services Regulatory Authority (IFSRA).
The consumer watchdog, which has compared the cost of repaying three personal loans over different terms at various financial institutions, said yesterday that the results demonstrated the benefits of taking time to examine the cost of borrowing closely.
IFSRA's consumer director, Ms Mary O'Dea, reminded consumers that they were not obliged to take out a loan at the financial institution with which they regularly deal or accept a pre-approved loan offer if they can get better value elsewhere.
The €800 saving is based on a loan of €10,000 over a five-year term. Savings of more than €250 were found when the cost of a €6,000 loan over three years was considered.
The Fine Gael deputy leader and finance spokesman, Mr Richard Bruton, said yesterday that these sums were "only the tip of the iceberg".
Based on the past six surveys carried out by IFSRA, consumers could be wasting more than €7,000 a year on financial services by not opting for the cheapest providers, he said.
A typical household could save €340 on home insurance, €1,360 on motor insurance (based on a 28-year-old male), €400 on credit cards and personal loans, €390 on a deposit account and €4,500 on mortgage interest, according to Mr Bruton, who called on IFSRA to advertise its survey results in local newspapers.
Mr Bruton also said it was time for direct measures to confront "excessive" margins in some segments of financial services.
"Consumers are looking for 'a little less conversation and a little more action'," he said.
In the personal loan survey published yesterday, Tesco Personal Finance emerged as the cheapest lender for loans of €6,000 and €10,000.
Its fixed-rate loans are provided by Ulster Bank. But consumers could pay €297 more in interest on a €10,000 loan if they go to Ulster Bank directly rather than applying through Tesco.
Tesco does not provide loans of less than €2,500 and AIB was found to be the cheapest in the €2,000 loan category. However, lower rates available from Bank of Ireland through its online and telephone banking channels, were not considered by IFSRA.
The Irish Bankers' Federation welcomed the publication of the survey, saying that it showed that competition existed across the range of variable and fixed-rate loans. The survey will be updated every six months.
