Consumers 'trying to go debt-free rather than borrowing'
Consumers 'trying to go debt-free rather than borrowing'
- Monday, 19 April 2010Taking out a personal loan for debt consolidation has become less popular than it was two years ago, according to the latest figures from Sainsbury's Finance.
In 2008, £1 in every £19 was used for debt consolidation, a figure that dropped to £1 in every £50 last year.
The supermarket bank believes the figures indicate that people are choosing to try to pay off their debts rather than borrowing more due to the difficult economic climate.
This is supported by the Bank of England's statistics that for five consecutive months at the end of 2009, repayments outstripped new unsecured consumer credit.
Steven Baillie, head of loans at Sainsbury's Finance, said: "Debt consolidation has always been one of the most common reasons for people to take out personal loans.
There has been a sharp decline in the proportion of people borrowing money in order to consolidate their debts."
He added that people were paying off debt instead of resorting to loans. The majority of loans taken out now are for home improvements and buying cars.

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