Business

Common Reasons for Personal Loans

Loans often are something that people usually don’t talk about or tend to avoid in conversations. However, loans can serve many purposes and aren’t necessarily a bad thing. While it is important to be aware of any stipulations and fine prints that may come with taking out a loan, the use of borrowed money can potentially offer the possibility to improve an aspect of life.

Choosing the right loan

It is true that there are many loan providers in the UK to choose from, yet it is important to make sure that you are getting the best loan for your situation. Online comparison sites such as BetterCompared.com can help you to choose a loan that will work best for you and your budget. It’s a new website that provides comparisons between loans and lenders, and helps shed light on each loan, so you can make an informed decision.

There are countless uses that a loan might be put towards. Research has shown that some reasons for taking out a loan are more popular than others.

Reasons for loans

People who took part in an online survey replied to why they have decided to take out a personal loan in the UK – here are the main reasons:

  1. Buying a car. This is quite a common reason that many people take out loans – to buy a new (or used) car. Getting around with ease holds a high importance, with 43% having taken out a loan to buy a car.
  2. Paying off previous loans. 36% of participants found themselves in the unfortunate circumstance of having to pay off previous debts.
  3. Covering bills and expenses. 22% of loans have been taken out to cover basic costs of living including utility bills and groceries.
  4. Private renovations. This category covers 24% of participants and includes home renovations such as a house extension and any DIY work.
  5. Luxury purchases. 11% have taken out a loan to purchase “luxury” items to treat themselves. Think anything from designer handbags to those new shades that you’ve been eyeing.
  6. Transportation. This may come as no surprise, but 16% of research participants claimed to take out a loan for transportation costs. This includes expenses such as petrol and airline tickets.
  7. Going on holidays. With all the stress of taking care of daily life chores and expenses, a whopping 55% have stated that they have taken out a loan so that they can go on holiday.
  8. Spending on others. This is heart-warming but can potentially shed light on the pressure some may feel around the holidays as 67% of this research group took out loans so that they could buy items and gifts for other people including children.
  9. Weddings. Wedding bells are ringing – and the desire to make your special day one to remember has been the reason that 7% of this study group has taken out a loan.
  10. Household emergencies. From washing machines to boilers, there are a handful of vital functions that run a household. It is no wonder that 9% have taken out a loan to resolve house emergencies.

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