The following figures prove that the market of personal loans is expanding:
By the end of October 2006, the total UK personal debt stood at Â£1,268 billion. Over the last 12 months, the growth rate increased to 10.4%, which equates to an increase of Â£110 billion
By the end of March 2007, the total UK personal debt stood at Â£1,318 billion. Over the last 12 months, the growth rate increased to 10.5%, which equates to an increase of Â£116 billion
According to market analysts, consumer awareness regarding costly overdrafts and payment cards debts has accelerated the growth of the personal loans market. Currently, it accounts for over a quarter of total UK consumer credit gross lending and is expected to grow by 19% by 2011. Analysts say that people are slowly but surely realising that multiple overdrafts and payment card debts â€“ in the form of credit cards, cash cards and store cards â€“ prove to be more costly, as they have high interest rates.
Another reason for the growing popularity of personal loans is that it provides finance for almost anythingâ€¦ Based on the nature and urgency of monetary requirement, demands can be categorised as:
Routine demands: Home improvement, health insurance, schooling, career development studies, wedding, vacation, holiday season, vehicle purchase and more
Critical demands: Bad credit, debt consolidation, extended treatments, late education fees, surgery and more
Lifestyle demands: Cosmetic surgery, flying lessons, gambling, spa treatment, spiritual healing and more
Based on collateral precondition, personal loan deals are either of secured (credit assistance against collateral) or unsecured (credit assistance without collateral) nature. It is a known fact that for homeowners and property owners, the secured type of personal loans is the best option, as it ensures maximum loan benefits. And, for tenants and students, the unsecured type is the only alternative.
Basically, the ability and willingness to pledge collateral is the basic criteria for opting for a secured or unsecured loan deal. However, loan seekers â€“ who are capable and willing to pledge collateral â€“ must give importance to the practicality or feasibility of getting into property related legalities and risking their property for a small monetary requirement.