News Categories

• Banking
• Breakdown Cover
• Car Insurance
• Credit Cards
• Home Insurance
• Insurance
• Life Insurance
• Loans
• Money
• Mortgages
• Pensions
• Pet Insurance
• Travel Insurance

News Archive

• February 2012
• January 2012
• December 2011
• November 2011
• October 2011
• September 2011
• August 2011
• July 2011
• June 2011
• May 2011
• April 2011
• March 2011

Newsletter

Debt consolidation with personal loans 'is declining'

By Sarah Engle, Tue 20 Apr 2010 - Published in Loans

The number of people using personal loans for debt consolidation is falling, it has been revealed.

A study by Sainsbury's Finance showed that £1 in every £50 taken out as a personal loan is used to consolidate debts, falling from £1 in £13 in 2007.

The organisation claimed that people are now choosing to pay off their debts rather than consolidate them and are using loans to fund large purchases such as home improvements and cars.

Commenting on the findings, Bestinvest senior investment advisor Adrian Lowcock said the change in behaviour could be due to the Bank of England's historically-low base rate of 0.5 per cent.

"With rates going up, not just on personal loans but also on mortgage rates, people have been better off paying off debts than putting cash into a savings account that is paying next to nothing," he explained.

Mr Lowcock also suggested that many people have used debt consolidation over the last few years, which means they no longer need to take out personal loans for this purpose.