New research from Alliance & Leicester today reveals that consumers continue to settle for the uncompetitive personal loans offered by the Big Four banks (i.e. Barclays, HSBC, Lloyds TSB and RBS NatWest) as they fail to shop around when applying for a loan.

A shocking 64% of adults in Great Britain admitted that they did not shop around at all when they applied for their loan. Of those who did shop around, just 17% made the effort to check the deals offered by two or three other providers.

The survey carried out by independent research agency BMRB, shows 52% of loan customers have a loan from the Big Four banks, and of those, nearly nine out of ten people – an astonishing 88% – went to them as they already hold their savings or current account with them.

Furthermore, over a third of loan customers with the Big Four (39%) chose them as their loan provider as they believe they are the most competitive and have the best rate on the market. Amazingly, when asked what rate of interest they think they are paying on their loan, 50% did not know. An additional 23% of borrowers said below 7% APR, and 12% said between 7.1% and 9% APR. In fact, the average typical APR for a loan with the Big Four is 9.8% APR.

Commenting on the findings Andy Bayes, Head of Personal Loans, Alliance & Leicester, said:

“It is worrying that at a time of increased competition in the loans market there is such reluctance by consumers to shop around for a better deal. With loan rates at an all time low it is astonishing that the Big Four banks continue to dominate this market despite the uncompetitive deals they offer."

“High street banks are relying on consumer inertia to enable them to charge higher rates of interest and it is time that borrowers woke up to the fact that apathy costs money.”

For consumers considering applying for a loan or switching providers, Alliance & Leicester's website, www.alliance-leicester.co.uk, provides access to many useful tools to help and guide them with their financial choices.

The Debt Buster Loan Calculator enables consumers to work out how much they can afford to borrow, decide over which period they wish to spread their repayments and how much they can save by switching and/or consolidating debt from existing credit cards, store cards, personal loans and overdrafts.