Bad credit personal loans: Consumer credit up 1%

Figures released by the Finance & Leasing Association (FLA) have shown that consumer credit grew by one per cent in August.

However, the body said that this increase was driven by sales in the used car market, with customers using dealer motor finance to purchase vehicles.

The FLA revealed that spending in most other credit sectors, such as personal loans, store cards and second-charge mortgages, dropped in August.

Fiona Hoyle, head of consumer finance at FLA, said: "The consumer credit market remains subdued, reflecting consumers' cautious approach to spending. Over the next few months, we will see what effect last week's Comprehensive Spending Review may have."

Ms Hoyle added that the government must consider the fragility of consumer credit as it carries out its Consumer Credit and Personal Insolvency review, in order to ensure new measures do not further restrain the sector.

The figures released by the FLA reflect data released earlier in the month by the British Banking Association, which said that volumes on active accounts had increased in August.