Consumers seek credit for a variety of reasons. Some are keen to invest in a new car, while others want to finance study costs. Meanwhile, it is also common for individuals to want money in order to pay for much needed holidays, or to cover the expense of their weddings. Additionally, people eager to set up their own businesses are also often in need of extra cash.
The trouble is, not everyone can access unsecured personal loans because of their credit scores. If these indicators are poor, individuals can be thwarted in their attempts to enter into deals with banks. Thankfully, there is an alternative to this that involves a system of guarantor loans. Credit provided in this way can prove to be a lifeline for consumers.
Meanwhile, new research suggests that the demand among people in Britain for loans is on the increase. The latest Aviva Family Finances Report revealed that the typical debt held by families, excluding mortgages, rose by 48 per cent in 2011.
In January 2011, typical annual household debt was £5,360, but this had risen to £7,944 this month. The rise suggests that consumers are relying on credit to a greater extent.
It is no surprise that demand for unsecured personal loans and other such provisions went up over this period. Unemployment also increased and inflation was high. Some of those who would have struggled to leverage the money they needed to cover particular costs via more traditional means may have turned to guarantor loans instead, providing those with bad credit with another option for lending which doesn’t carry the cons of a huge APR.
Commenting on the costs facing families, Aviva identified housing as the single largest expense. This represents an average of 20 per cent of typical monthly incomes, it suggested.
Head of protection sales and marketing at the firm Louise Colley remarked: “Families in the UK are still very concerned by the rising cost of living and levels of unemployment.”