Consolidation of existing debt ‘is main reason for new loans’

Consolidation of existing debts is the main reason that people take out loans these days, according to new research.

Sainsbury’s Bank found that more than 40 per cent of its loan customers were taking out a loan with the intention of paying off other debts.

And home improvements were also a popular reason, accounting for more than a quarter of loans taken out earlier this year.

However, loans for the purposes of buying a new car or van were even more popular, with 30 per cent of customers using the money they borrowed to acquire a new vehicle.

Steve Baillie, head of loans at Sainsbury’s Bank, says that “the purposes behind personal loans are many”.

“People are looking at their credit and consolidation is the number one reason for customers taking out loans,” he added.

According to Credit Action statistics, total personal debt in the UK at the end of July 2007 stood at £1,355 billion.

© Adfero Ltd

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