"Consolidation" main reasons behind loans

The main reason for people to take out a personal loan is for "consolidation," according to one lender.

Sainsbury’s Bank said that even though there were still multiple motives behind Brits borrowing money through a loan, a chance to consolidate debts is the most common.

According to the bank, the next most popular rationale for borrowing cash through a loan is to fund a car or van purchase, with 33 per cent putting the funds towards a vehicle.

Just over a quarter are using loans to make home improvements, adding value to a property.

Steve Baille, Sainsbury’s Bank head of loans, sent out a warning to those borrowing to consolidate debts.

"If you are going down the consolidation route you have to be strict with yourself so that you’re not just deferring the problem for future months and years," he said.

Figures from Credit Action show that total UK personal debt stood at £1,355 billion at the end of July 2007.