Debt consolidation is #1 reason for Brits to take out a personal loan
A survey of 1,000 users found that almost half (46%) of respondents were applying to consolidate, with home improvements (23%) and car loans (22%) the other most popular reasons. In what can only be regarded as a sign of the tough economic times, loans for “luxuries” such as holidays (3%), and weddings (3%) lagged a long way behind and business loans (2%) and medical bills (1%) made up only a fraction of borrowing requests.
The results of the survey seem to reflect the tough economic situation many consumers find themselves in at present. The fact that they feel the need to consolidate existing debts serves to illustrate dramatic changes in their own circumstances. Many people are losing jobs or feeling the pinch with mortgages, household bills etc. Consumer credit is now difficult to secure, so borrowers are turning to sites such as thelendingwizard.com for support and to try and find a way of securing some extra cash. It is also interesting that people are looking to make improvements to their homes at the expense of other luxuries, in order to be well-positioned for when the housing market recovers.
Whatever consumers need a loan for, it’s vital that the information they receive is prompt, transparent and accurate. Sadly, this is not always the case with existing aggregator sites - as they are often not the quickest, most efficient or the cheapest way of finding a personal loan. In fact, many employ an application process that can potentially damage consumer credit ratings and as a result actually reduce the chances of borrowers securing a loan.
TV adverts for personal loans face ban
Did you know that television adverts that casually invite viewers to borrow thousands of pounds are to be banned?
The Advertising Standards Authority will use a new social responsibility code to stamp out reckless consumer credit promotions. According to an article published in the Independent on April 24, Lord Smith ASA's chairman said the ASA would brief firms about how they could advertise loans in future. He also revealed the ASA would step up its monitoring of supermarket price comparison ads, which claim a basket of goods is cheaper in one company's stores than in others.
We certainly welcome the ASA report and indeed would go further and add that such adverts often quote misleading typical APRs which customers with credit problems simply will not get.
Beware of shopping around for loans
Our research reveals that 88% of Brits are unaware that applying for secured or unsecured loans online can damage their credit rating if they do it too many times. The research reveals a lack of awareness among consumers, which could result in them unwittingly degrading their own credit profile and therefore damaging their overall chances of getting a loan.
We surveyed 1000 British consumers – and just 12% of them were aware that using traditional loan comparison sites to compare typical rates and then applying with multiple lenders to get accurate quotes can damage a borrower’s credit score. Whilst comparison sites have revolutionised the way we search for financial products, some of the most popular sites are simply diverting consumers to complete multiple loan applications until they are accepted. This is compounded by the problem that very few consumers are being offered the ‘typical’ rate advertised.
In contrast, you can use TheLendingWizard.com to see the actual interest rates you will be paying before you apply, ensuring that you are not making multiple loan applications. This approach preserves your credit score, helps you to borrow wisely and ensures you get the loan best suited to your needs.