Unsecured Loans Less Popular
The recent economic down turn and the credit crunch has had a dramatic effect on peoples finances and in many cases, has altered the way they think about borrowing money, with many individuals now reluctant to commit themselves to the regular monthly repayments on a new personal loan.
Over the course of the last twelve months there has been a huge drop in the number of people applying for unsecured loans, with the number of unsecured loan applications reduced by a staggering 45 per cent since February last year as borrowers feel the impact of the current economic situation, according to the latest figures from the Finance and Leasing Association (FLA).
One large reason for this down turn in new unsecured loan business is due to the lack of availability of funding from banks, building societies and other loan companies, many of whom are particularly reluctant to lend to people without some form of security for the loan. Even those lenders who are prepared to offer loans, have increased their rates to compensate for the additional risk at the present time, effectively making an unsecured loan unaffordable for many potential borrowers.
The other main reason for the reduced level of new loan business id due to the fact that many people who probably wouldn’t have thought twice about applying for an unsecured loan last year are now reviewing their financial situation more carefully and, with the current lack of job security and ever rising threat of unemployment, do not feel as though they are able to commit to the prospect of having to make monthly loan repayments over several years and in many cases are choosing to do without the luxury items they would have been buying if they felt that they had more financial security.
