People use bank loans to finance car purchases
Published On 28 June 2007
The most common reason for a person to take out a loan is car finance, a new report suggests.Research from Alliance & Leicester showed that 37 per cent of loans in the UK were used by people in the UK to finance the purchase of either a new or used car.
A further third (37 per cent) revealed that they used loans to consolidate existing debt.
"It seems that a lot of people are using a personal loan to buy a car, with 37 per cent of our borrowers taking out a personal loan specifically for that reason," explained Richard Al-Dabbagh, Alliance & Leicester's senior personal loans manager.
"This isn't too surprising as the finance deals offered at most car showrooms do not compete with our rates.
"It's not very difficult to find typical forecourt finance APRs approaching 20 per cent, compared with 6.5 per cent APR for a typical A&L loan."
However, Mr Al-Dabbagh added that it was "a little more surprising" that the research showed that an increasing number of people were using loans to finance caravan purchases.
