Last post: Feb 7, 2018
As personal loan debt rises in the UK, lenders are set to become more cautious about approving unsecured loans. Get the latest…
The availability of unsecured personal loans is likely to drop over the coming months as rising personal debt makes many lenders increasingly cautious. Recent statistics from the Bank of England's quarterly credit conditions survey reveal that many lenders (especially mainstream banks) are expecting to approve fewer unsecured loans this quarter.
Policymakers at the Bank of England are likely to be pleased by the trend, which they believe could help quell the growing level of household debt in the UK, which has risen over the past few quarters. A reduction in loan availability may help control this growing level of debt.
The finance squeeze
The "clampdown", however, is less welcome news for many consumers who already find sourcing finance for emergency expenses difficult. With high street banks already reticent to lend small quantities on a fast and flexible basis, non-traditional lenders have become the go-to source for unsecured loans when unforeseen financial needs present themselves.
From unexpected veterinary bills, to broken down vehicles, there are many situations in which consumers may need to access short term finance. The latest news about loan availability may make this already tricky task even harder, driving borrowers to less trustworthy sources of finance.
Credit scoring gets tougher
It isn't just unsecured loan availability which is likely to be impacted in 2018, credit scoring is likely to become tougher over the coming months. With tightening controls on lending, banks who are already lending less may also reduce the number of applications they approve on the grounds of eligibility. Individuals with bad credit are particularly likely to be affected by these enhanced restrictions.
Mainstream banks and their customers will be most affected by these changes, however, consumers should still be able to source unsecured loans and other finance options from alternative lenders.
Need to source fast finance you can repay on your terms? We can help you compare, choose and arrange the best option for your individual circumstances. Contact our personal loan experts today.
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