The Money Pages Read about the latest personal finance news, features and opinion. The Money Pages also offers advice on banking, debt, insurance, investments, retirement and savings. 
This is according to research by Compare the Market which also discovered nearly half of people quizzed about taking out loans said they felt stressed or worried about the debt.
Meanwhile a third reported they found it difficult to make their monthly repayments.
Yet the rising cost of living and high inflation in recent times have meant the need for a loan has been even greater than ever.
Indeed, the second most common reason people took out their most recent personal loan was to consolidate other debt (19%).
The main reason people took out a loan, however, was to purchase a car (33%).
Loans, it would seem, are the preference over credit cards or buy now pay later, with borrowers preferring their structured repayment plans and the more affordable rates.
Data from Moneyfacts released at the end of March showed the average purchase APR on a credit card was 34.7% and the average purchase rate per year was 25.66%.
A loan for £5,000 over three years has an interest rate, according to Moneyfacts of 11.5% on average.
When it comes to the amount of money borrowed, Compare the Market found almost half of respondents (47%) took out a personal loan between £2,000 and £10,000.
What’s more, 28% reported they paid an interest rate between 1% and 5% and another quarter (25%) paid between 5% and 10%.
Advice on taking out loans
Andy Hancock, chief growth officer at Compare the Market, said: “Our research shows there are many reasons why people take out personal loans. You could use a loan to pay for home improvements, a wedding, or a car, for example. Loans can also have flexible terms and fixed interest rates and repayments.
“However, it is important not to borrow more than you can afford. Remember to always check the total cost of the loan and plan a budget to repay it. Some credit card providers also offer interest-free deals for an introductory period, making them a potentially cheaper option than a personal loan.
“It’s encouraging to see that a good proportion of people are using price comparison websites to find the right personal loan that suits their needs and circumstances.
“We’d encourage anyone looking to take out a personal loan to thoroughly research the available options on offer to ensure they find the most appropriate product for them.”
