Customers paying for an £8,000 personal loan over four years have paid on average £453 (2.61%) more than the advertised rate, according to the latest research.
P2P lender Zopa has published a report revealing that only one in four customers (26%) believed that banks and lenders could be trusted to offer the rates they advertised.
The report — which included insights from 1,000 current loan customers between 8-19th May 2019 — found that it was “nearly impossible” for customers to compare loan providers or shop around for a loan.
Zopa conducted a mystery shopping exercise for the report with customers applying at Barclays, NatWest, RBS, HSBC, Lloyds, Sainsburys, Tesco, M&S and Clydesdale.
According to Zopa, the majority of personal loan providers in the UK won’t show customers the actual rate they’ll be offered until they’ve completed the loan application.
Other findings from the report included:
- the average rate offered to successful applicants was 6%, almost double the average advertised price of 3.4%
- banks which offered loans exclusively to existing customers offered them an average rate of 7.8% — some £680 more than the advertised rate over the lifetime of the loan
“Customers deserve a fairer personal loans market,” said Andrew Lawson, chief product officer at Zopa.
“Zopa was set up to challenge a market where misleading loan rates are costing people money and wasting their time.
“For most loan customers, what they see isn’t always what they’re going to get, and that’s not right.
“In contrast, customers applying for a Zopa loan can see the actual rate they are going to get and whether they’ll be approved for a loan before applying and without marking their credit file.
“It’s about time the industry commits to reforming its practices so that customers can shop around to get the best deal.”
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