Although the personal loans market has enjoyed several years of strong growth, evidence suggests that the credit boom has now passed its peak. Consumer credit gross lending grew strongly from 2000-04, but declined slightly in 2005, and is expected to decline further in 2006. In addition to a diminished appetite for borrowing, providers must also now deal with rising levels of bad debt, which have been fuelled by spiralling numbers of IVAs.

This report examines the factors that influence the demand for borrowing in general as well as the issues that have an impact specifically on the market for personal loans, detailing the main sources of competition to this sector. The size of the personal loans market is then assessed in terms of the number of people with a personal loan and the estimated value of money lent on unsecured and secured personal loans. The providers’ volume share of the market is also provided, as are examples of innovation in the market and examples of loans on offer. The influence of the Internet on distribution channels is also examined. Finally, Mintel – having commissioned consumer research exclusively for the purposes of this report – has drawn on its research to understand and analyse the behaviour and attitudes of consumers in regards to borrowing and personal loans.