Sharp Decline In Demand For Debt Consolidation Loans Reported n

Tue, 20 Apr 2010

Fewer Brits are taking out loans to consolidate their debts, according to new research by Sainsbury’s Finance .

The group revealed that just one pound in every 50 was borrowed by its personal loan customers `solely` for debt consolidation purposes in 2009, compared with one pound in every 19 in 2008 and one in every 13 in 2007.

The findings indicate that an increasing number of borrowers are opting to repay their debts.

Steven Baillie, head of loans at Sainsburys Finance, said: "Debt consolidation has always been one of the most common reasons for people to take out personal loans, but while more and more people are taking out a loan for other reasons, there has been a sharp decline in the proportion of people borrowing money in order to consolidate their debts ."

"This suggests that more and more people are choosing to repay their debts rather than consolidate them."

He added that debt consolidation loans are still a good way for people with multiple debts to reduce their monthly repayments, "as long as the borrower looked around for the best rates on the market".

The Sainsbury’s Finance study also found that the majority of personal loans are currently taken out for more domestic reasons such as home improvements and car purchases, with loan demand for the latter rising by nearly 50 per cent in the past six months.
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