Comparison searches for loans have more than doubled over the last year, new analysis from Experian has revealed.

When comparing January with the same month last year, Experian found that loan searches increased by 101%, while loan applications also climbed by 69%. 
 
Consumers suggested that debt consolidation (21%) was the main reason to borrow, followed by the rising cost of living (19%). However, Experian revealed that further analysis of consumer application behaviour suggests some borrowers could be enticed by headline loan rates, leading them to making unfavourable credit decisions.
 
Data from Experian Marketplace showed the number of people selecting loan products they are pre-approved for fell by 5% in January, when compared with November 2021. Subsequently, clicks for products with low headline rates grew by 6% over the same period.

Experian’s analysis, based on a study among 2,000 people, also found that almost a fifth (18%) of respondents said they didn’t understand that a headline rate might not be available to them. Nearly half believed they would be able to secure the best rates for loans they see advertised online (47%).

Headline rates are the advertised deals consumers see when searching for credit products online. However, these rates may change following a credit check, and can often be much higher, the credit reference agency warned.

“Headline representative rates are an indication of the lowest rate available with a lender, but providers only need to offer their headline rate to 51% of successful customers,” commented Experian head of consumer affairs, James Jones.

“The remaining 49% can be offered a different deal. Therefore, if you’re looking to take out credit you should always seek out products that are either pre-approved or include guaranteed rates and limits.

“Our latest analysis reveals an increased demand for credit, in many cases because consumers are taking control of their finances and looking for better deals. However, some are looking to borrow to help with their day-to-day living costs, which might not be sensible.

“In all cases, we urge consumers to borrow wisely and make sure they take the right steps to apply for the right products suited to their needs. This means knowing your credit score, checking your eligibility, and applying for products that you are likely to be granted.”

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