This report examines the UK personal loans market and encompasses both secured and unsecured lending. In recent years, both the consumer credit and mortgage industries have benefited from low interest rates and consumers' growing willingness to take on debt in order to fund major purchases and other more immediate spending plans. Among the array of credit options available to consumers, personal loans and credit card lending have been the most popular choices.

This report examines the UK personal loans market and encompasses both secured and unsecured lending. In recent years, both the consumer credit and mortgage industries have benefited from low interest rates and consumers' growing willingness to take on debt in order to fund major purchases and other more immediate spending plans. Among the array of credit options available to consumers, personal loans and credit card lending have been the most popular choices.

Growing demand for both types of credit has underpinned the growth in overall consumer credit. Today, the average adult in the UK owes just over £3,700 and this excludes mortgage lending. Such a relatively high level of consumer gearing is due to a combination of factors, including consumers' growing acceptance of debt as a part of life, their confidence in managing the repayments and the ease with which credit can now be obtained.

It is this favourable business environment, along with the potential of achieving high profit margins, which has attracted a number of newcomers to the market including various utility companies, supermarkets and other retailers, as well as a range of online specialists. Despite this increased competition, the personal loans market remains dominated by the large retail banks.

Barclays, HBOS, HSBC, Lloyds TSB, and NatWest/Royal Bank of Scotland provide the lion's share of unsecured loans, as well as a significant proportion of secured loans. The big five banking groups are able to leverage their well known brands, branch networks and high street presence, as well as their ability to cross-sell to their existing customers. They also have a number of subsidiaries and distribution partners, who help to extend their market reach. Nevertheless, the British consumer is becoming more financially savvy and more demanding and, as the market is particularly price-sensitive, the large banking groups are having to take increasing note of the competition, particularly those companies which operate from low cost-bases.

More generally, key to the continued success of the personal loans market is people's perception of their own financial position. Since the late 1990s consumer confidence has been largely underpinned by falling interest rates, as well as rising levels of employment and low unemployment. However, the Bank of England's recent decision to increase interest rates by a quarter-point could signal the end of the recent spending and lending boom, particularly given the fact that further increases are on the cards for 2004. It is thus even more crucial that lenders consider strategies they can use to stand out from the crowd, and the attributes they can draw on in order to make them most appealing to both potential and existing customers.

Designed to help businesses facilitate these actions, this report uses exclusive consumer research to provide insight into what consumers ideally want from their loan provider, as well as what motivates them to seek out a loan in the first place.. The findings are outlined in The Consumer section, including current ownership levels and a profile analysis of potential key target groups.

Investigating the markets for both secured and unsecured loans, other areas covered in the report are market factors, market size, key players, products, distribution and advertising. The section on key players includes selected company profiles from a cross-section of providers in the field. The penultimate section examines the future direction of the market and this is the followed by a presentation of Mintel's five-year market forecasts.

Readers may also find the following Mintel reports of interest:

Premium Credit Cards - UK, Finance Intelligence, October 2003

Non-standard Lending - UK, Finance Intelligence, September 2003

Changing Work Patterns - UK, Special Report, August 2003

Credit and Debit Cards - UK, Finance Intelligence, July 2003

Direct and Internet Selling: Leveraging the Potential of New Channels - UK, Finance Intelligence, April 2003

Car Finance - UK, Finance Intelligence, January 2003

Current Accounts - UK, Finance Intelligence, January 2004

Mortgages - UK, Finance Intelligence, March 2004

Student and Graduate Finance - UK, Finance Intelligence, April 2004.