As many of us move in to February having had our first pay day of the year, lots of us are still counting the cost of all that Christmas cheer. Indeed, unsecured loan applications are likely to peak over the next few months, as those credit card bills arrive. New research from Sainsburys Bank reveals that as many as 180,000 people could take out unsecured loans, mainly for debt consolidation in the first quarter of 2017, worth a whopping £2billion in total.
Furthermore, the research also reveals that the average loan for debt consolidation is now £11,400, whereas the average borrowing on a non-debt consolidation loan is £9,600, some 18% difference. Thus debt consolidation loans will now account for 35% of the total value of all loans taken out between January-March 2017. It shows that as consumers we are prioritising our debt issues and taking control of our finances. Consolidating debts into one low interest rate payment, obviously saves money in the long term, and its easier to manage the one payment as opposed to perhaps several smaller ones.
Simon Ranson head of Banking at Sainsburys Bank said “Personal loans can be a fantastic debt consolidation tool, enabling borrowers to lower their monthly repayments and unify their debts and payments under one provider. However, in order to justify the new loan you’ll need to work out if the interest paid on the consolidated balances by the end of the repayment term will be lower than the interest you would have paid under your existing arrangements.”
So make sure that you do your research and check all the loan providers. The unsecured loans industry is at its most competitive, and so there are some fantastic deals to be had.