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Majority of consumers only borrow when necessary

A recent survey carried out by the Alliance and Leicester has indicated that the majority of consumers in the UK do not borrow money unless they need to, and do try and steer clear of getting into debt.

According to the survey 62 percent of UK consumers only take credit when absolutely necessary, which equates to nearly two thirds of consumers in the UK striving to stay away from debt.

With those that do rely on credit around 50% were more concerned about convenience rather than looking at value for money. The results of the study showed that many consumers would take out store cards rather than shopping around for less expensive credit cards, simply because store cards were offered to them at the point of sale, and provided them with an immediate discount on the purchase that they were making in many cases.

Over 40% of borrowers said that they had taken a car loan from a dealership because it was more convenient, despite being more expensive. A small number of borrowers were savvy enough to shop around when taking out finance in order to find the best deals and rates. Many stated that the only reason that they took finance was to enable them to spread the cost of larger purchases such as a car or a holiday.

A spokesman from Alliance and Leicester stated: "The research highlights how, despite good intentions, many people don't give careful thought to how they borrow. Anyone who is paying over the odds for large purchases on costly store cards or expensive dealer finance, should look at how much they could save by moving to a low-rate personal loan."

Tom Smith
12th June 2007


More Information:

  • Finding the Cheapest Loan
    How do you find the cheapest loan? Through a combination of factors that include understanding your credit score, determining the best type of loan for your purposes, and shopping around
  • Shopping around for loans - why not?
    Chances are if you were shopping for a home theatre system, you would shop around to find the best deal. So why not shop around for a loan?
  • Deciding on a Loan
    What is the one thing that all financial advisors tell their clients before committing to any financial agreement? It is the most basic rule of all commerce; do you homework and shop around.


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