Unsecured personal loans mostly taken out to consolidate debts or buy a new car

Unsecured personal loans are taken out by over half of applicants to consolidate debts but a loan to buy a new car is also a popular need.

According to a review by Halifax Personal Loans, 54% of loan applications are to consolidate existing debts.

This debt consolidation is often done to reduce the cost of servicing the debt by moving it from a more expensive product, such as a store credit cards to the less expensive personal loan.

A loan to buy a new car is popular, with 23% of applicants wanting to buy a new or used car.

15% want a personal loan for home improvement.

Interestingly many are also wanting the loan to invest in themselves. Perhaps something that will grow as more people become unemployed as a result of the recession and need to improve their skills through training or study.

Halifax personal loans made include for

• Driving instructor course
• pilot licence
• Ski instructor’s cours
• Corgi examination / registration

Some more unusual loan applications have been for

• False teeth
• A microlight
• A beach hut
• Cattle
• Mobile disco
• Publishing book / memoirs

Director of Loans at Halifax, Russell Galley, commented ‘Whatever your reason for taking an unsecured loan, with Halifax you’ll have no monthly repayment for the first three months. This breathing space could help you to pay for other essential extras, such as buying books when taking a course.’

As well as no repayments for the first 3 months, a Halifax unsecured personal loan also includes

• a term of between 1 and 7 years
• fixed monthly payments to ease budgeting
• a fixed rate to meet your own specific circumstances

The current typical APR is 8.9% for loans over £7,000.

As well as Halifax, there are other personal loans providers, including Alliance & Leicester and Marks and Spencer for example.

Halifax is part of Lloyds Banking Group.