A&L Personal Loans finds high interest on kitchen revamps leaves a bitter taste

Wed, 25 May 2005

A quarter of Britons take out personal loans in order to pay for a kitchen revamp, Alliance & Leicester Personal Loans found in a new study.

The personal loan provider however warned consumers that by taking out personal loans as part of dealer finance schemes, billions of pounds are being wasted.

Alliance & Leicester Personal Loans found that kitchen retailers pocket £1.2 billion in interest payments, when homeowners could put the money to better use by upgrading appliances.

The study by the bank revealed that in the last five years 20 million British homeowners have upgraded or are planning to upgrade their kitchens soon.

A quarter took out personal loans to fund these projects, and of these 800,000 took out a personal loan through their vendor to improve worktops and taps.

According to Alliance & Leicester Personal Loans however, people using dealer finance are wasting an average of £1,422 each on interest payments.

Ash Mukadam, personal loans manager at Alliance & Leicester said it is no surprise that consumers want to update their kitchens, with celebrity chefs and Food TV making cooking a hot topic.

"What is surprising is that people do not appear to put as much effort into looking for a good rate of finance as they put into the style of their cupboards or the colour of their worktops," he said.

Alliance & Leicester found that the average interest charged by retailers for finance on new kitchens was 15.2 per cent, while the best value personal loans on the wider market charge less than half this amount.

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