Personal Finance

Consumer debt falls amid economic concern

Concerns over the state of the economy impacted consumer debt in June, figures have revealed.

The Finance & Leasing Association shows that during the month £4.27 billion in credit products was borrowed, down 8% on the same month last year.

During the month almost all areas of lending declined, except car loans which increased to £1.09 billion, up 13% year-on-year.

Unsecured loans saw the biggest fall, down to £190 million with advances dropping by a third compared with June 2009.

Store instalment credit, which had been more resilient than other forms of lending during the recession, also suffered a steep drop, declining by 32% to £160 million.

Borrowing through credit cards was 9% lower than a year earlier, but at £2.56 billion it remained the most popular unsecured product.

Fiona Hoyle, head of consumer finance at the FLA, said: "This month's figures suggest that consumers are uncertain about the economy.

"It may be that they are waiting to see the impact of public sector expenditure cuts on disposable income before making any long-term repayment commitments on credit.

"The statistics show that the credit market is still weakened."

But the group added that although demand for credit was weaker than last year, its members still lent £12.5 billion during the second quarter of the year, the equivalent of £200 for every person in the UK.

Sam Jackson

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