Time and MONEY: PAYING THE PENALTY; Borrowers caught out by early redemption fees.
WITH debts hanging over them, many people in Wales are having to wait to wipe the slate clean - or pay the pena
According to research by online bank Egg, Welsh borrowers are being charged a total of pounds 17m per year to repay personal loans early due to lenders' complicated schemes.
Of 61 providers listed as offering unsecured personal loans, 48 have some form of early redemption penalty attached to the loan - typically an interest penalty of one or two months.
The Egg survey showed nearly 90 per cent of consumers would look to clear their debts in one go given the chance but only one in three think they would be charged for repaying their loans ear
More than a third of the 2,000 borrowers questioned said they would be put off paying their debt early or moving to a cheaper provider if it meant they were likely to have to fork out to do so.
Sharing this view is plant attendant John Watkins, who has had experience of payback penalties.
John, 61, of Barry, said: ``I had a loan a few years ago and when I thought I'd pay it off the company wanted quite a bit of money to do it early. Instead I said no and decided to stick to making the regular payments.''
However, John also thinks consumers need to make more of an effort to make sure money providers don't baffle them with small print. ``People need to be more careful with terms and conditions before they sign up to things,'' he said. Egg UK chief executive Mark Nancarraw said: ``Early repayment fees on loans are clearly designed to act as a financial disincentive, penalising the financially conscientious.''
# MONEY MAN Worries concerning early redemption fees for loans could result in you requiring the services of personal finance guru Alvin Hall.
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|Publication:||South Wales Echo (Cardiff, Wales)|
|Date:||Jun 25, 2003|
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