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Millions of Brits Use Consolidation Loans to Ease Debt Worries

New research has revealed that over six million UK consumers have taken out debt consolidation loans over the last three years in order to ease their debt problems. Millions in the UK have taken on more debt in order to clear previous debts which, including credit and store cards, accrue at high rates of interest.

The research, carried out by UK online comparison site, has shown that one in seven UK adults turned to consolidation loans to help ease the pressure of their debt, with unsecured personal loans proving to be the most popular form of loan.

The average amount borrowed by Brits through consolidation loans reached a whopping £13,000. This indicates how much many in the UK owe through unsecured borrowing and that there is a real battle among many Brits to control their finances.

However, not all opted for unsecured loans when it came to coping with personal debt as MoneyExpert found that many consumers chose to borrow more on their mortgages as well as taking out loans secured against their home. The danger in this method is that those who choose this way face the prospect of losing their homes if they default on repayments.

The research also revealed the average amount borrowed in the various regions of the UK with Yorkshire seeing the largest amount of debt being consolidated at £16,065. East Anglia followed in second with the average consolidation loan being around £15,642. Scotland saw an average loan amount of £14,439.

The attraction of consolidation loans, however, is considerable when compared with those using credit cards for consolidating which tend to charge far higher rates of interest, usually around 15.9%. In comparison, the typical APR for an unsecured loan can be between 5.9% and 7.3% making the loan the most cost effective way to consolidate debts, especially those that are charged at higher rates of interest.

Alisdair Milton
28th February 2007


More Information:

  • What Happens if I Can’t Pay the Debt Consolidation Loan?
    If you have a debt consolidation loan what would happen if you can't pay? This article gives some scenarios and some practical advice.
  • What is the Role of Debt Consolidation Companies?
    There are many forms of lender on the market. Not all of them are banks. Debt consolidations companies play a specific role in the debt market.
  • Consolidating Debts with a Loan
    If it seems advertisements for debt consolidation loans are everywhere, it is because consolidated loans are big business. The primary reason for people taking out personal loans over the next year will be for debt consolidation.
  • Managing your debts
    It is easy for debt to get out of control. Student loans, losing your job, becoming ill or any number of other unforeseen events can easily cause debts to mount up.

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