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Shopping around for loans - why not?

Chances are if you were shopping for a home theatre system, you would shop around to find the best deal. So why not shop around for a loan?

Studies indicate that on average, Britons could save nearly four thousand pounds if they did a little comparison-shopping prior to signing for a loan--enough to buy a very nice home theatre system, indeed! Despite this, many Brits are still not conducting this type of shopping when it comes to finances.

The good news is that enough people are catching on to comparison-shopping, however, and in response, lenders are offering lower prices. For example, one study determined that homeowners could save £2,475 a year on a £110,000 interest only mortgage. Credit card savings could add up to £541 by switching cards. Nearly five hundred pounds could be saved on a £9,000 personal loan, £65 on travel insurance, and £82 on a mortgage cover.

With these savings, one would think that more people would be comparison-shopping for their loans--and people claim to be doing just that. One research group found that sixty-seven percent of consumers claimed to shop around when looking for a personal loan, but only thirty-five percent of consumers actually put their money where their mouth is and do it. Instead, most opt for the first loan for which they find and are approved. Yet sixty-eight percent of consumers shop around when considering most other purchases.

Because loans aren't sold in a store (or even online) with the price tag hanging right there for all to see (or in this case, interest rates and terms), shopping around for a loan can be difficult in some cases.

Mystery shoppers of one study found that they had a difficult getting phone sales people to pinpoint an exact rate if they were accepted for a loan. Forty percent of these callers were not told a specific rate. Additionally, thirty-eight percent were informed they had to open an account with the lender before they could obtain a quote, and twenty five percent were told they had to accept the loan on that phone call before being provided with an exact quote. Online shopping may prove to be difficult as well.

One solution is of course, refusing to do business with companies who do not provide quotes prior to purchase. After all, you wouldn't agree to buy that home theatre system without first knowing the total cost. You may not end up with the best terms, but you may not want to do business with that type of lender at any rate.

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