Fewer Loans Being Used to Consolidate Debts

Mon, 17 May 2010

New research from Sainsburys Finance has revealed that far fewer borrowers are using personal loans to consolidate their debts than they were two years ago. Just under eight per cent of loans in 2007 were used for debt consolidation purposes, equating to one pound in every thirteen. That figure has since fallen dramatically, however, with just 2 per cent of loans used by borrowers to consolidate their debts in 2009.

While British consumers have sought to cut down on the amount they are borrowing since the onset of the credit crunch, the study from Sainsbury’s Finance suggests that loans continue to be used as a means of financing new purchases such as cars or home improvements. Though this trend may be worrying if borrowers have other debts which require repayment, it does show that borrowers are looking around for the best interest rates rather than accepting the car finance deals offered to them.

Head of loans at Sainsbury’s Finance, Stephen Baillie, urged consumers with debts to look into consolidating their debts, with personal loans available which may help them to reduce their monthly repayments.
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