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Consumers 'avoid unsecured loans'

The number of unsecured personal loans being taken out by consumers has dropped, new research has revealed.

Findings from the Finance & Leasing Association (FLA) revealed that FLA members have written £660m-worth of new unsecured loans during the first two months of 2009, compared with £1.1bn lent during the same period of last year.

The research showed that the value of secured loans for February 2009 fell by 83% compared with February 2008.

New credit card business also dropped by 11% when comparing the two periods.

Geraldine Kilkelly, head of research and chief economist at the FLA, said: "Rising unemployment and low consumer confidence have led to a further drop in unsecured loan new business in the last two months."

However, the study showed that increasing numbers of consumers are using store instalment credit.

The FLA stated that the deals offered by shops including interest free credit and deferred payment are usually for small amounts which consumers are more confident about meeting the loan repayments on.

posted by allinsurance @ 2:08 AM