Increase in unsecured loans could be causing debt problems
Increase in unsecured loans could be causing debt problems
- Monday, 25 October 2010The increase in the number of people taking out unsecured loans could be causing them to get into
debt problems, suggested an expert.
Martin Bamford, chartered financial planner at Informed Choice, stated that the increase can be attributed to a number of factors including the difficulty in obtaining a secured loan.
Other reasons could be that consumers are facing greater financial pressures following the recession and some need to use debt to fund their lifestyles, he added.
He said: "Debt tends to breed more debt, so a rise in unsecured loans points towards even greater levels of debt in the future.
"Unsecured loans tend to be more expensive than their secured alternative, so they can take longer to repay and become a more serious problem if jobs are lost or other financial difficulties arise."
Therefore, if consumers resort to an unsecured loan it could lead them into further
debt problems in the future.
Mr Bamford made these comments following the release of the latest Bank of England's Trends in Lending report.
The report found that there was a fall in demand for credit card borrowing but this was offset by the rise in unsecured loans in the third quarter of 2010.

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