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The personal loan market is facing a surge in demand. Centrix reported in August that personal loan borrowing was at his highest level in 10 months, and new loans made him over $500 million. The increase suggests that consumers are turning to personal loans to cover their expenses in the face of high inflation and rising interest rates. Over the past three months, Google searches for personal loans have increased by 22%, further demonstrating the high demand for these loans.
According to data from online loan provider Loansmart, the average personal loan size has increased from $6,000 to $14,000. But it’s not all new debt, says managing director Murray Greig. Certainly, it makes sense to look for cheaper alternatives to high-cost loans. Greig reports that although the number of applications is strong, the approval rate is about 1.5% lower than last month. Affordability is a factor in low approval rates as borrowers do not necessarily have the disposable income to take out another loan. This is where debt consolidation can play a role. Saving on repayments on an existing loan while simultaneously receiving replenishment from a low-cost lender is a better alternative than taking out another high-cost loan. It’s so big that borrowers have to do some research to get the best rate.
As household finances continue to tighten, personal loans may provide immediate relief, but it is important for borrowers to carefully consider their financial situation before taking on new debt. Check all your current borrowing amounts and interest rates and request a loan appraisal to see if you can save anything. You can also use our debt consolidation calculator to estimate how much you could save. Although the actual savings will depend on your financial situation.
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