Value of unsecured loans taken out falls by 45%

The latest figures from the Finance and Leasing Association (FLA) have shown that over the last year the value of unsecured loans being taken out has almost halved.

During February, Finance and Leasing Association members wrote £316 million worth of unsecured loans, which is 45% less than the figure for the same month of last year.

A sharp decrease was also recorded in secured loans in February. Members lent £57 million throughout the month, which is 83% less than last year. Credit card lending fell by 11% to £2.49 billion as well.

Overall, Finance and Leasing Association members lent a total of £3.89 billion in the second month of this year, down by 22% since 2008.

The decline in secured and unsecured lending has been attributed to low consumer confidence and rising unemployment, with Britons reluctant to take on more debt.

Head of research and chief economist at the Finance and Leasing Association, Geraldine Kilkelly, said: “Our figures show that Finance and Leasing Association members have written £660 million worth of new unsecured loan business in the first two months of 2009, compared with £1.1 billion in the same period last year.”

Finance and Leasing Association
UK industry body for the asset finance, consumer finance and motor finance sectors. www.fla.org.uk/