Loans – Prudent Consumers?

Recent figures have revealed that a startling amount of Brits are using near to a third of their monthly incomes to cover repayments on one or more unsecured personal loans.

The figures published by Callcredit, a credit reference agency, show that 14% of the population are using roughly 30% of their income to cover repayments – this figure has doubled in the past year alone! Furthermore, the number of people spending over half of their monthly earnings has increased dramatically from 2% last year to 6% today.

These are considered particularly worrying figures as general guidelines state that anyone who is spending in excess of a quarter of their net earnings on loan repayments is considered to be “over-indebted”.

Although worrying, these figures could suggest that consumers are becoming more careful with their spending and becoming more inclined on paying off their debts. Indeed, various consumer polls have coincided with this belief.

The first for instance, found that 43% of respondents feel as though their financial situation is not going to get any better over the next 12 months. Interestingly, it would seem that those in the older age groups are even less optimistic, with 54% of those over 55 years of age believing that their financial situation is not going to see any improvement.

The driving factor for these assumptions is the rising costs of energy, grocery and general living costs along with the difficulty many individuals are already having in obtaining any new lines of credit.

The credit crunch has certainly sent a strong shockwave through the population that they now more than ever have to invest more time budgeting, and borrowing as little as possible. This is backed by a further study in which 73% of respondents stated that they are being more careful with their spending then they were this time a year ago.

With many finding it difficult to make the required repayments on their unsecured loans, payday loans etc. it is vital that proper advice is sought if the situation becomes unmanageable. In most cases your loans lender will be able to arrange an alternative repayment plan, making your repayments more manageable.