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Car purchases 'most popular' reason for loans

New research has revealed that purchasing a vehicle is the most common trigger for personal loan applications throughout the UK.

One-quarter of Britons have taken out a loan to pay for a used car, while 12 per cent have done so to buy a brand new car, the study by Alliance & Leicester Personal Loans found.

Other popular reasons for taking out loans included debt consolidation - primarily as a result of suffering at the hands of high-rate store cards and finance deals - and home improvements.

Richard Al-Dabbagh, senior personal loans manager for Alliance & Leicester, said that the results were "not surprising" as traditional forecourt finance deals tend to carry higher interest rates than personal bank loans.

"It seems that a lot of people are using a personal loan to buy a car, with 37 per cent of our borrowers taking out a personal loan specifically for that reason," he commented.

Earlier this month, the bank claimed that 42 per cent of consumers have opted for forecourt finance out of convenience rather than value.

See how much you could borrow with a motor loan from Lombard Direct.

27/06/2007 16:15:20

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