Loans offered by retailers at the time of a purchase, known as ‘point-sale’, have been subject to criticism in a report by Alliance & Leicester.
Up to 36 per cent of people surveyed often take out ‘point-sale’ loans for lifestyle improvements such as new kitchens, double-glazing or a new car.
Recent research by Alliance & Leicester indicates that the average consumer wastes £5,300 by not searching for a better deal as ‘convenient’ finance is not always the most competitive.
Andy Bayes, head of personal loans at Alliance & Leicester, said: “Retailer credit deals can be one of the most expensive ways to borrow money, so they should be treated with caution.
“I urge consumers to look at all the options when buying large as well as small purchases and shop around for a better deal than retailer finance provides.”
Interest on retailer loans was often found to run into double figures, for example double-glazing loans were found to have interest of up to 20 per cent annual percentage rate (APR), while kitchen retailers offered 15.2 per cent APR and car dealerships offered 13.3 per cent on average.
The report advised consumers to look at personal loans offered by major financial providers as a low-interest alternative to retailer finance.
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