Opportunities for loan consolidation ‘reduced’

Indebted people could find it harder to take out low-cost loans now than during the same time a year ago, it has been suggested.

Research by uSwitch.com revealed that there are fewer loans available to consumers than there were 12 months previously, with 36 currently on the market – a reduction of 37 per cent from the 57 that could be obtained at this time in 2008.

Personal finance expert with the company Louise Bond noted lenders are more inclined to provide better rates for their existing customers as they can assess their financial behaviour more closely.

She added that it would be unlikely that those successful in applying for debt consolidation loans this year would reach the 2008 figure of 1.3 million, but stated that “loyalty is one of the only aspects that could win consumers better interest rates”.

Last month, Champion Finance remarked that the demand for debt consolidation loans could increase as the recession draws to a close as people seek to reduce their outstanding debts.

By Sarah Adie