Consumers Remain Cautious Towards Spending And Loans
The economic problems which have been faced by the UK over the course of the past couple of years have forced many individuals in the country to rethink their financial situation and not to rely too heavily on the assumption that their salary will always be there.
As a result of this, many people have severely cut back on their spending, particularly when it comes to taking out a new loan for a significant purchase, as a large number of consumers try to reduce their monthly expenditure and do not want the cost of additional monthly loan commitments.
A new report from the Finance and Leasing Association (FLA), whose members account for somewhere in the region of 30 per cent of all unsecured loan applications, shows that there has been a significant reduction in the number of personal loan applications over the course of the past twelve months.
FLA members arranged a total of £56 billion worth of unsecured loans over the twelve months to May this year, a reduction of 15 per cent from the previous year and the number of secured loans offered has fallen by a staggering 73 per cent over the same period, due to the lack of available funding from banks and building societies.
The store card market, on the other hand, has seen an increase in lending over the past year, possibly due to retailers offering incentives to take out their store cards and this market as a whole has seen an increase in new business of around 8 per cent in the last three months alone.
Geraldine Kilkelly of the FLA said “Access to wholesale funding remains a problem for lenders and with lower average earnings growth and a higher risk of unemployment, consumers are thinking carefully before taking on further credit commitments. Store instalment credit allows customers to borrow in a very controlled way for a particular purchase, with repayments being easily planned within their household budget.”
