- Over eight in ten say they are in control of their debt repayments
- Men are more likely than women to use a loan to fund an anniversary
- Consideration towards using a personal loan has risen by over 50% in past three months
The second Lloyds Bank Lending Report shows that people surveyed continue to feel upbeat when it comes to the future of their finances. Confidence levels in paying off unsecured debt remain high, with four in five (83%) of those surveyed feeling confident or very confident that they will meet their future repayments.
There has also been a rise amongst those who are able to keep up with their current debt repayments at 84% for quarter 2, (from 81%) compared to the first three months of the year. Fewer people have missed payments compared to the beginning of the year, with only one in ten (11%) saying that they had missed at least one payment in the last 12 months, compared to 13% in the first quarter of the year.
Sam Clark, Head of Loans at Lloyds Bank, said: “We are starting to see encouraging signs as more people can better manage their loan repayments. In addition, there has been an increasing shift in those saying that they will not need to take out more debt in the future.
“Overall, the results paint a positive picture and the upward move in consumer confidence will help a lot more people feel more in control of their finances.”
The top reasons people have taken out a personal loan include consolidating debts so that they are all in one place (31%), and purchasing a car or bike (28%). However, unsecured borrowing to making home improvements saw a decline (15%), a fall of five percentage points.
Of those who used lending to fund a special occasion, nearing half (45%) took out a loan to fund someone else’s birthday. While those who fund an anniversary (15%) remains static, 19% of men are planning to use a loan to fund an anniversary, where as only 11% of women are planning to do the same.
Consideration towards using a personal loan[ii] has risen over the past three months by 58% (12% of people to 19%), as has the consideration of credit cards which offer rewards, from 10% to 16% in the last quarter. Low interest credit cards have also seen a significant jump in consideration from 13% to 21%. Overdrafts consideration has increased from 5% to 9%, while the consideration of peer-to-peer lending has doubled over the past three months to 4%.
Applying for a loan has remained relatively stable in the past three months, with online (45%), tablet (5%) and mobile phone (5%) devices collectively being the most popular channels at 50%, followed by in branch at 32%.