Unsecured loan providers withdraw from market

by Gill Montia

Story link: Unsecured loan providers withdraw from market

Moneyfacts.co.uk, the financial search engine, has published November figures showing a 10% decline in the number of unsecured loans available.

This week Hanley Economic BS and Eskimo loans (which is funded by Northern Rock) withdrew from the market, having followed GE Money, Leeds BS and Liverpool Victoria, the friendly society.

According to Moneyfacts, the trend reflects increased caution amongst personal loan providers and a lack of confidence in payment protection insurance, which is still under investigation by the Office of Fair Trading.

Esther James of Moneyfacts believes that the personal loan market could look very different in 2008 and anyone considering taking one out might be advised to act sooner rather than later, as interest rates of up to 10% already appear in the Moneyfacts best buy tables.

Meanwhile, Chiltern Debt Management has published its November Debt Monitor showing that over the last month the percentage of wages debtors can afford to offer creditors has fallen by 1%, to 17%.

However, the amount the average debtors is contractually obliged to pay has remained the same, at 67%.

Chiltern suggest that there are a number of indicators that can reveal the level of debt stress in a person’s life.

These include: 25% or more of income paid to service unsecured debt; four or more credit commitments; using credit to pay for life’s essentials, such as food or travel; paying only minimum balances on credit and store cards; a history of consolidation and further credit spending.