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Unsecured loans shunned

Unsecured loans shunned

Category: Loans

Updated: 27/08/2010
First Published: 30/04/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The popularity of unsecured loans has fallen drastically since the beginning of 2008, as consumers have shied away from long term credit repayments.

New statistics from the Finance and Leasing Association (FLA) have revealed new unsecured loan business is currently 45 per cent lower than it was in February last year.

The terms of an unsecured loan means that lenders do not use the customer's house as security against funds.

Unemployment has also been cited as one of the key factors in this latest trend away from unsecured finance.

One area that bucked the trend is store instalment credit, which saw eight per cent growth in February, with deferred payment and interest free deals enticing customers who are more comfortable with smaller purchases.

Figures published by the association also revealed finance provided to consumers by FLA members stood at £58.2 billion in the 12 months to February this year - 12 per cent down on the previous year.

New credit card business has also fallen, down 11 per cent in February compared to 12 months earlier.

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