Over a quarter (27%) of Brits took out a loan this year, and the average value of each loan is up 33% since January
- The average loan value in November 2021 is over £27,000
- Millennials (25–34-year-olds) are the most likely age group to take out a loan
- The top reason for taking a loan out this year was to help pay for a new car
- The most loans are being taken out in the Southeast of England
- The loans with the highest average value are being taken out in Greater London
A new study from Evolution Money shows that the average value of loans being taken out across the UK has increased from just over £13,000 in January 2019 to above £27,000 in November 2021, and over a quarter (27%) of UK adults have taken out a loan (excluding loans for mortgages and student loans) this year.
Further research from established lender Evolution Money reveals that 2021 may well be ‘the year of the loan’, with the number of loans taken out having increased by 41% year-on-year and the average loan value consistently increasing too – it is now 33% higher than it was in January.
But what have these loans been spent on? According to a survey the most common reason for taking out a loan this year was to help purchase a new car, which one in ten (10%) of all those who took out a loan this year spent the money on. Other common uses for loans included covering costs for a new a qualification i.e., course fees or paying for home renovations.
|Top five reasons for getting a loan in 2021||Of those who took out a loan this year, this % used it for…||Estimated number of Brits took out a loan for this reason*|
|For a new car||10%||Approximately 1.85 million|
|To help with a home move||6%||Approximately 1.11 million|
|To pay for a qualification||6%||Approximately 1.11 million|
|For a holiday||5%||Approximately 920,000|
|For home renovations||5%||Approximately 920,000|
The regions of the UK where the most loans have been taken out this year include the Southeast (16% of all loans taken out this year), the Northwest (15% of all loans taken out this year) and Yorkshire (12% of all loans taken out this year).
However, when looking at where the average value of loans was highest this year, Greater London came out of top with an average loan value of £29,727 in 2021 (so far), followed closely by the Southeast (£24,305) and the West Midlands (£21,913).
Millennials (25-34 year olds) are the generation most likely to have taken out a loan this year (50% of them have done so) and are also most likely to have spent this on a qualification versus any other age group (14%), a home purchase (14%) or a holiday (12%). Some (7%) have also taken out a loan this year to cover the costs of Christmas.
In contrast, older generations are most likely to have taken out loan to tick something off their bucket list or to make home improvements specifically to increase their property’s value.
More men took out a loan this year (30%) compared to women (24%) but had similar priorities when it came to deciding what to spend the money on: a new car, costs associated with a home move and/or cost associated with a new qualification.
Interestingly, taking out a loan to pay for body-confidence-boosting cosmetic surgery was equally as popular with men and women this year (1% of both).
Hannah Dearden, Operations Marketing Executive from Evolution Money said: “Taking out a loan is not something to be taken lightly and must always be done responsibly. For those who do their research and are confident they can pay the money back; a loan can be a positive decision for people to make.
“This can manifest itself in a variety of ways: for some it will be to consolidate debt, for others it will be a new car or an educational qualification that could help boost their future earnings.
“To make sure you take out the best loan for your needs, we would always recommend educating yourself on the different types of loans available; after all, what may be perfect for someone else, may not be quite right for you.”
Article from Evolution Money
For more information on loan purposes and the types of loan that Evolution Money provide, please visit: https://www.evolutionmoney.co.uk/our-loans/types-of-loans-available and https://www.evolutionmoney.co.uk/our-loans/loan-purposes