Households Turn to Multiple Loans Amid Rising Costs, 72% Struggle with Repayments
Households are increasingly turning to multiple loans, including personal loans and student loans, to cope with rising costs, with 72% struggling to keep up with repayments. The average debt stands at £7,296, excluding mortgages, and takes 3.5 years to clear. Credit cards are the most common form of debt, held by 86% of those with multiple debts.
A significant portion of younger generations, specifically 34% of 18 to 24 year olds and 25 to 34 year olds, are resorting to payday loans. However, for homeowners seeking to consolidate debts, secured personal loans, also known as homeowners insurance, are an option. These loans offer lower interest rates, currently around 7% from online lenders, with amounts up to €75,000 and terms of up to 8 years. Some private lenders even advertise rates as low as 2%.
Debt consolidation loans can simplify repayments and potentially save money, but they come with risks. If repayments are not met, homeowners could lose their property. It's crucial to verify lenders' credibility and review terms carefully. The Financial Conduct Authority registers legitimate lenders. Despite their benefits, one in five people with debt are unaware of debt consolidation loans.
Households are battling debt, with multiple loans and credit cards being common. While payday loans are popular among younger generations, homeowners can consider secured debt consolidation loans for lower interest rates. However, understanding the risks and verifying lenders is vital. Financial education and awareness of debt consolidation loans could help households better manage their debts.
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