Cars and home improvements top the league for personal loans

This year, debt consolidation is likely to be the most popular reason for taking out a personal loan, says Sainsbury’s Bank.
Sainsbury’s Bank, which offers loans at 6.9% APR typical, says nearly one in three loans, 30%, taken out this year will be for debt consolidation, collectively they will be worth an estimated £11.90bn.

The second most popular reason for taking out loans will be to purchase cars. The bank estimates that some 1.24m personal loans worth around £9.92bn will be used for this. This will be followed by home improvements, the third most popular reason.

Rachel Brereton, loans manager at Sainsbury’s Bank, says: "When taking out a personal loan, you need to ensure that you shop around to find a competitive rate. The difference in rates on a loan of £10,000 could be as high as 8.0% APR which over five years could mean around £2,180 in excess interest repayments."