Men are nearly 60% more likely to take out a personal loan than women. This is according to new research from personal finance comparison website Quotezone.
We delve deeper into these findings to establish the reasons behind the discrepancy in the borrowing habits of men and women.
Borrowing in the UK: what are the stats?
According to Quotezone’s data, the average age of someone taking out a loan in the UK is 36 and the average loan amount is £16,000.
The top three reasons customers take out loans are to:
- buy a car
- make home improvements
- consolidate debt
The stats show that the number of loans for new cars increased during the pandemic period in 2020, along with loans for:
- car repairs
- household goods
- mortgage support
The number of Payday loans also rose in 2020.
Other loan types, such as personal loans and debt consolidation loans, experienced a drop in applications during the same time period. Personal loan quote volumes, for example, were down 5%, while applications for debt consolidation loans fell by a whopping 44%.
Perhaps the most interesting finding, however, was that men’s borrowing significantly exceeds that of women. Quotezone’s research shows that men are 59% more likely to take out loans than women.
Why are men more likely to borrow than women?
There are several possible explanations.
For example, men generally tend to have higher and more reliable incomes than women. As a result, men may feel more comfortable taking out a loan, knowing that they will be able to pay it back.
In addition, studies have shown that on average, men tend to have higher credit scores than women, giving them greater access to lower-cost borrowing.
One reason that women have lower credit scores is that they tend to be more conservative when it comes to their finances. For example, some women see borrowing as a last resort. They will choose to cut back on essentials and do everything else possible to avoid borrowing.
The discrepancy between the borrowing habits of men and women could also be explained by relationship dynamics. For example, in many couples, the man takes control of the household finances, including actions such as taking out mortgages or applying for personal loans.
What do people need to be aware of before taking out loans?
According to Greg Wilson, CEO and personal finance comparison expert at Quotezone, people have been more cautious with their money during the pandemic. They have generally borrowed less and spent it on new cars and home renovations.
Wilson believes that this trend is likely to continue and that it could help to boost household savings.
At the same time, he warns that the easing of lockdown measures could trigger a return to extravagance for some as they race to book holidays and hit the shops.
To avoid jeopardising their financial wellbeing, Wilson recommends that people seek professional financial advice from qualified financial advisers before making any major financial decisions.
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