Personal loan availability on the decrease
January 7, 2008
A recent report has indicated that the number of personal unsecured loans now available to consumers in the UK has decreased, with many lenders too worried to offer loans that are not secured against any form of asset. The rising levels of bad debt in the UK coupled with the widespread effects of the credit crunch, which has impacted on most financial sectors leaving a path of destruction, have resulted in many lenders decreasing the number of financial services and products on offer and increasing stringency with regards to their lending criteria.
In the past few weeks alone a number of lenders have announced their intention to stop offering personal unsecured loans, at least for the time being. Amongst those lenders are Liverpool Victoria (LV), the Leeds Building Society, and GE Finance. Higher interest rates have reduced affordability for many consumers, and with bad debt levels already sky high fewer and fewer lender want to take the risk of gaining yet another bad debt.
One industry professional stated: “Such a large reduction in just the last month is worrying. With no signs of rate rises slowing, it’s a rather unsettled market. The credit crunch is showing its strength in the personal loan market.” Officials also stated that even lenders that were continuing with these financial products were operating more stringent lending criteria and had hiked up interest rates. This includes rates on personal loans, credit cards, and other forms of finance, where lenders are trying to recoup financial losses and protect themselves from further losses.
Another lender, Eskimo Loans, which is a lender that is funded by Northern Rock, announced late last month that it would also be taking its unsecured personal loan deals off the market, and many other lenders have already taken various other financial products off the market.
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