Millions using personal loans to sort out debts, data reveals

Fri, 16 Feb 2007

Millions of people are turning to personal loans to get a grip of their financing problems, according to the latest figures.

Research from financing website moneysupermarket.com has indicated that 13 million Britons have turned to loans in the past to consolidate at least some of their debts.

However, it appears that a total of 8.5 million people who took out a loan continued to rack up debts after arranging the deal with a financial services provider.

Of this group, 42 per cent of people continued to build up credit card deficits, while 18 per cent went further into their overdraft.

Commenting on the figures, Tim Moss, head of loans and debt at moneysupermarket.com, urged personal loan customers to think carefully before going out and spending heavily.

"Taking a personal loan to consolidate debts can be a useful way for people to get their finances under control but a loan for these purposes should be considered carefully," he said.

He added that customers should use personal loans as a financing option to free themselves from debt and "not as a licence to go spending".

One option that debtors may wish to consider is taking out an unsecured personal loan.

Unlike secured deals, repayments on these loans are not linked to collateral such as a home or a car.

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