Unsecured loans 'becoming less popular'

The popularity of unsecured loans among UK consumers is diminishing, it has been claimed.

Figures produced by the Finance and Leasing Association (FLA) suggested that total unsecured finance provided to people in the 12 months to February 2009 by FLA members was £58.2 billion.

This represented a decrease of 12 per cent compared with the year ending February 2008.

FLA head of research and chief economist Geraldine Kilkelly said: "Rising unemployment and low consumer confidence have led to a further drop in unsecured loan new business in the last two months."

Meanwhile, secured loans were said to have declined by 83 per cent in February this year compared with the same month in 2008.

Recently, the government announced that it is to provide additional funding for the Social Fund, which enables people on unemployment benefits to get interest-free loans for one-off purchases, such as buying a suit for a job interview.