More than one million Britons have taken out a personal loan without the knowledge of their partners or family members, new research shows.
In a study carried out by Abbey Loans, it was revealed that some 1.35 million UK personal loan borrowers have taken out such a product in private. Overall, it was suggested that the total value of these loans stands at about 7.7 billion pounds, an average of 5,720 pounds per person. Although 54 per cent of such debtors have taken out 3,000 pounds or less, the average loan value was reported to be "skewed upwards" by the five per cent of respondents who are applying for amounts of between 20,000 pounds and 50,000 pounds.
More than half (56 per cent) of clandestine borrowers, around 762,000 people, state that they have taken out a low cost personal loan to use as a means of debt consolidation, to help them pay off money owed to a variety of creditors. Just under 199,000 Britons (seven per cent) look to borrow to assist them with making home improvements, while 100,000 do so to buy a car. In addition, 65,000 consumers purchase a holiday with their borrowing. Meanwhile, about 27,000 borrowers use a UK loan to meet the cost of having cosmetic surgery.
Research from the financial services firm also revealed that people between the ages of 35 and 44 are the likeliest to have taken out a secret personal loan. On the other hand, the over-65s are most probable to not opt to borrow covertly.
Abbey Loans also pointed out that 56 per cent of people questioned reported that they had not told their partner or members of their family that they had applied for a loan because they are too embarrassed. Some 29 per cent claimed that the loan is a private matter, with six per cent reporting it is to help fund a surprise for either a relation or partner.
Commenting on the figures, Paul Morrish, director of Abbey Loans, said: "Borrowing in secret - especially large amounts - is not advisable and we would encourage people to be open and honest about their finances. Talking about your financial situation with others can help so that you can be realistic about what is affordable. However, for those who are comfortable they can afford repayments, it's worth doing some research to find the most appropriate deal for you. There are different types of loans that suit different circumstances - and our staff can help talk you through the options."
Although taking a low rate personal loan can provide valuable help with finance, it may be advisable for prospective borrowers to ensure they make their loved ones aware of their intention. In doing this, it is possible that should they later encounter difficulties with their money management than they will be able to turn to friends, family and partners for help.
Additionally, a cheap personal loan could be a cost-effective way to fund the holiday of a lifetime. Speaking earlier this year, Richard Al-Dabbagh, personal loans manager at Alliance & Leicester, reported that a low-rate loan could be an idea to finance a break as borrowers will be to make manageable low-cost repayments.
