The most popular motivation for taking out unsecured personal loans is debt consolidation, research from Halifax has revealed.
The Halifax Annual Loans Review has found that debt consolidation loans are the most popular among its unsecured loan customers, with more than half (54 per cent) of loan applicants borrowing money to consolidate existing debts in 2008.
As the credit crunch continues to squeeze consumers' household finances, many unsecured loan customers have opted to move their debts from more expensive products, such as credit cards, in order to reduce the cost of their borrowing.
After debt consolidation, buying a car was the second most popular reason for taking out a loan, with 23 per cent using the money for this purpose, and Halifax predicts that this trend will continue as so far this year, 22 per cent of Halifax loan applicants want the money to buy a new or used car.
A further 15 per cent of applicants wanted the loan so that they could make home improvements.
Applicants for Halifax unsecured loans are continuing to borrow money in order to improve their skills, with many undertaking training or study, such as driving instructor courses, flying lessons, ski instructor courses, and Corgi boiler certificates.
"Our research shows that loans are taken out for a wide variety of reasons," comments Russell Galley, director of Halifax loans. "Similar to the last annual review there is a continued trend in the number of people who are looking to invest in themselves and their future by undertaking further training or making purchases which will help them work smarter.
"Whatever your reason for taking an unsecured personal 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."
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