Around 7.7 million UK adults expect to take out a loan this year, according to the research by Go.Compare. Using average loan amounts since 2022, this means personal loan borrowing could hit as much as £63.7 billion in 2025.
The majority of these will be used for car payments, says the comparison site. Over £21.2 billion could be borrowed so that drivers can purchase a new vehicle in the coming months, as 1.9 million motorists plan to take out a loan for this.
Meanwhile, close to 2.1 million Brits will borrow money for home improvements. Whether renovating a room or DIY decorating, loans worth £18.4 billion could be secured for house upgrades in 2025, based on average loan amounts from the last few years.
Loans for weddings, holidays and other uses are also expected to total around £10.7 billion, as a further 2.1 million UK adults hope to take out loans for these expenses.
From September 2022 to December 2024, the most common reason UK adults borrowed money was for debt consolidation, in total. Around one-quarter (27%) of loans during this time were to consolidate debts, and amounted to an average loan of £8,751.98 per person.
|
Loan usage type |
Average loan amount |
|
Car |
£10,717.90 |
|
Debt consolidation |
£8,751.98 |
|
Home improvements |
£8,602.72 |
|
Wedding |
£7,211.62 |
|
Other |
£6,065.58 |
|
Holiday |
£3,443.00 |
The third-most expensive personal loans were for home improvements – reaching just over £8,600 per person on average. Around one-quarter (27%) of loans secured were for property projects, while 28% were attributed to other reasons.
Meanwhile, Brits have taken out loans of £7,211.62 on average to pay for weddings since September 2022, making up 3% of all loans during this period. A similar number (4%) were used for holidays, with travellers borrowing an average of £3,443.
Matt Sanders, a loans expert at Go.Compare, said: “Taking out a loan is a serious financial commitment. You must be confident that you’ll be able to meet the repayments of your loan without issues in the future, taking into account the consequences if you fall behind. When it comes to some of the main loan uses, like car payments, holidays or weddings, it’s worth considering alternative ways of funding them first to avoid needless debt.”
Via @PropertyWire