Borrowers cash in on competitive personal loans
Paying for a vehicle - whether it’s cars, bikes or caravans - is the most popular reason to borrow, new research from Alliance & Leicester Personal Loans shows. Across the UK, one in four (25%) borrowed to buy a used car, one in eight (12%) borrowed for a new car, while a minority (3%) took out personal loans to help pay for motorbikes or caravans.
Another third of borrowers (34%) said they were re-organising their finances by consolidating other debts – the second most popular reason - after being stung by high interest rates on store cards or finance deals, and converting them into one manageable monthly payment.
The findings also indicate the third most popular reason to take out a personal loan is to tackle home improvements, with one in five (20%) borrowers dusting off their tool kits to help tackle home improvements, extending their homes or adding loft conversions.
But the research also highlights a host of regional differences. They include:
South West residents favour borrowing to fund all forms of vehicles - including new and used cars, motorbikes and caravans
But when it comes to cars, it’s the Scots (12.8%) who are most likely to plump for the shiny new vehicles, while borrowers on the Borders are thriftier and prefer to choose second-hand motors
The Scots are also the most house-proud, with nearly one in four (23%) using their loan for home improvements. Those in the South are the least likely to take out borrowing to spend on their properties (17.6%)
More than one in three borrowers (36%) from London and the South East use personal loans to consolidate debt
Northern Ireland boasts the largest proportion of customers opting to borrow to pay for their wedding - compared to other parts of UK
The North West has the greatest proportion of borrowers taking out personal loans to help pay for holidays of a lifetime
Richard Al-Dabbagh, Alliance & Leicester Senior Personal Loans Manager, said:“It seems that a lot of people are using a personal loan to buy a car, with 37% of our borrowers taking out a personal loan specifically for that reason. This isn’t too surprising as the finance deals offered at most car showrooms do not compete with our rates. It’s not very difficult to find typical forecourt finance APRs approaching 20%, compared with 6.5% APR for a typical A& L loan.
“A little more surprising, perhaps, is that a small but growing number of people are getting a personal loan to purchase a caravan. These might be an eco-minded few, but it seems an increasing number of people are turning their backs on airport queues, train delays and other negative holiday certainties.”