LOW COST LOANS

There's a new special rate loan being advertised at the moment by Alliance and Leicester. As a loans provider Alliance and Leicester quite often offer loans at the lower end of the cost range but in doing that they are quite selective in who they accept for their loans. Calling a loan a "special rate" deal doesn't automatically mean it's cheaper than usual, in fact it could even be more expensive.

In their advert they use data from the Moneyfacts website and compare themselves against Egg, Royal Bank of Scotland, Natwest and First Direct. These selective comparisons are usually meaningless and in this situation they are tjust that. We checked the Moneyfacts website ourselves and found Moneyback Bank, Sainsburys and Barclaycard all offering cheaper loans than Alliance and Leicester's special rate.

So the Alliance and Leicester low rate loan is not really that special. At 7.4%, there are cheaper loans available and one of them, from Moneyback Bank, is actually provided by Alliance and Leicester themselves.

Loan rate loans are always based on personal circumstances, as the above loan advertisement says in it's small print, but that fact that two loans being offered by the same company, albeit using different brand names, vary in price is also odd. So the special rate offered by Alliance and Leicester is "special" because it's 0.2% more expensive that their other loans.

All this goes to show that you can't take loan adverts at face value. A better way of finding a loan is to work with a broker who has access to many different loan sources and can search on your behalf for the best deal.