Majority of secret loans ‘used for debt consolidation’

Debt consolidation is the main reason for people taking out a loan without telling their partner or family about it, new research shows.

A report by Abbey shows some 1.3 million people have taken out a so-called secret loan, with 56 per cent admitting they used this money to pay off other debt.

The majority of secret loans were for £3,000 or less, Abbey found, with the average amount borrowed £5,720.

However, the value of five per cent of these secret loans exceeded £20,000 and reached as much as £50,000.

The debt advice offered by Paul Morrish, director of Abbey Loans, was for people to talk about their financial situation with others and guard against secret borrowing.

“However, for those who are comfortable they can afford repayments, it’s worth doing some research to find the most appropriate deal for you,” he added.

According to Credit Action debt statistics compiled last week, the average household owes £56,234.