Banks overcharging for personal loans insurance

Monday, October 31, 2005

Personal loans from a bank are more expensive to insure than loans from specialist brokers, the British Insurance Brokers Association (BIBA) has revealed.

According to the Telegraph, insurance from a high street bank can cost as much as 340 per cent more than that of a specialist broker.

"It is outrageous that customers can be charged four times as much for insurance if they do not shop around," Eric Galbraith, chief executive of BIBA told the paper.

'People often assume, when they take out a loan, they can trust the provider of that loan to give them value for money. But this is often not the case."

The news of these huge insurance premiums will come as a shock to those looking to use a personal loan to fund some or all of their shopping trips this Christmas.

Earlier this month, Moneyfacts stressed the need for consumers to be careful when taking out Christmas loans to make sure they know exactly what they are getting.

"Not all consumers will receive the attractive headline rate, so they should check the actual rate they are offered and whether this is still an attractive deal," said Samantha Owens, Moneyfacts credit cards and personal loans editor.
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