The structure of personal loans and business loans has not changed in recent years. However, the flexible car loan schemes have led to intense increase in consumer borrowing. The Bank of England reveals that lenders have loosened the borrowing policies, which is why, the borrowers find it east to borrow unsecured loans, despite their low credit scores. Among all types of loans, the car sales have won over consumer confidence by hitting record high since financial depression.

Don’t be surprised to see the roadblocks, as around 2.63 million new cars have hit the road in 2015. Previously, the highest number of car sales had been recorded in 2003, which was 2.58 million.

Is It Debt-Fueled Recovery?

A popular belief is that the private sector, which faced a debt downfall of 130% of GDP in 2008, is fueling the debt to recover it. It is not a debt-fueled recovery by the private sector but it is because of the low interest rates that the banks are offering. And about that, the banks are offering low interest rates, yet generating good profits.

A few benefits that are fueling up the consumer borrowing include these.

Flexible Payments

A majority of the consumers take out loans from the banks. The benefits of borrowing from the banks rather than the private lenders are countless. The bank will sign a contract with you and open a loan account for you. The borrower can easily access the loan account and deposit money directly into their account.


Taking out car loans had never been this easier. Many banks offer low interest car loans to people with bad credits also. Unlike home loan or business loan, you do not need high credit score or extraordinary billing history to take out a car loan. Above all, it is a direct dealing process i.e. the borrower deals with the service provider in person to finalize the deal in the best interest of both parties.


Practically, you purchase what you can afford. However, when you take out a car loan, you may consider purchasing a luxury sedan instead of a simple vehicle. Flexible car loans with lower interest rates have increased the borrower’s scale of affordability.

Fixed APR

In most of the personal loans like home loans, the Annual Percentage Rate increases or decreases, according to the interest scale provided by the government. This interest rate is updated at the beginning of every fiscal year. However, it is different with car loans. Most often, when you take out a car loan, you get fixed APR, which means that you will pay fixed amount of interest even if you take out loan for 30 years. It helps the borrowers calculate their total investment in a car, which is why, they may consider spending a few extra Pounds to get a luxury sedan, which they may not afford otherwise.

If Brexit dismantles UK’s economy, the government may consider increasing the interest rates on all loans increasing the car loans.