Analysis of data from MoneySuperMarket shows that while the average amount borrowed decreased by £ 109 in 2019, it increased by £ 793 (7%) in 2020, with the average loan now standing at £ 11,834.
In 2019, the average loan size fell in 72% of UK regions, with more than half (53%) seeing a decline of £ 100 or more. This contrasts sharply with 2020, when almost all regions (97%) saw an increase of at least £ 100 and 80% an increase of at least £ 500.
Over the past year, the purpose for which people took out loans has likely changed. In 2020, the average value of a home improvement loan increased by £ 1,078 and car loans increased by £ 638, six times the increase (£ 94) in 2019.
Sasha Evans, Money Expert at MoneySuperMarket, said: “The almost £ 800 increase in the average loan amount taken shows a change in the finances of many people in 2020. Our data suggests that people who do not have financially affected by the pandemic are looking to borrow a little more, perhaps for a new kitchen or to buy a new car. This year the average loan amount has also increased as we have seen fewer loan applications for things like going on vacation or to top up a wedding fund, where people borrow less.
“Whether you’re renovating your home, fixing a broken washing machine, or paying off existing debt, taking out a loan can be a useful way to spread costs and manage your finances. It is also potentially a useful way to build your credit history by showing lenders that you are responsible for your money.
“If you need a helping hand with your financial situation, it’s important to find the loan that’s right for you. The best way to do this is to research all of the available options and compare them before deciding which deal to choose. “
Some parts of the UK have seen more dramatic changes than others. Watford saw both the biggest drop in 2019 (down £ 1,145) and the biggest increase in 2020 (up £ 1,859). However, Chester saw the largest percentage increase in the UK between 2019 and 2020 (up 19%), with the average loan increasing by £ 1,794, the second highest increase after Watford.
At the other end of the spectrum, the Channel Islands were two of only three regions to experience a decrease this year. The average loan in Guernsey is down by £ 1,296 (10%) compared to 2019, while in Jersey it is down by £ 1,035 (7%) – despite the highest average loan size in the UK. United this year at £ 14,695.
Top 20 regions with the highest increase in average loan amount
| Rank | Region | Average loan amount in 2019 (£) | Average loan amount in 2020 | Increase of £ between 19 and 20 | % increase between 19 and 20 |
| 1 | Watford | £ 12,123 | £ 13,981 | £ 1,859 | 15% |
| 2 | Chester | £ 9,479 | £ 11,274 | £ 1,794 | 19% |
| 3 | Southall and Uxbridge | £ 11,643 | £ 13,211 | £ 1,568 | 13% |
| 4 | Croydon | £ 11,756 | £ 13,151 | £ 1,395 | 12% |
| 5 | Quagmire | £ 12,777 | £ 14,124 | £ 1,347 | 11% |
| 6 | Stockport | £ 11,172 | £ 12,444 | £ 1,272 | 11% |
| 7 | Enfield | £ 11,918 | £ 13,142 | £ 1,225 | ten% |
| 8 | London | £ 12,158 | £ 13,374 | £ 1,216 | ten% |
| 9 | Sutton | £ 12,139 | £ 13,234 | £ 1,095 | 9% |
| ten | Milton keynes | £ 11,543 | £ 12,616 | £ 1,073 | 9% |
| 11 | Harrow | £ 13,041 | £ 14,113 | £ 1,072 | 8% |
| 12 | Bradford | £ 10,358 | £ 11,380 | £ 1,022 | ten% |
| 13 | Kingston-upon-thames | £ 13,866 | £ 14,870 | £ 1,003 | 7% |
| 14 | Kilmarnock and Ayr | £ 10,316 | £ 11,296 | £ 979 | 9% |
| 15 | Lincoln | £ 10,698 | £ 11,667 | £ 969 | 9% |
| 16 | Kirkcaldy | £ 10,731 | £ 11,696 | £ 965 | 9% |
| 17 | Warrington | £ 10,847 | £ 11,809 | £ 962 | 9% |
| 18 | Guildford | £ 12,332 | £ 13,283 | £ 951 | 8% |
| 19 | Durham | £ 10,477 | £ 11,428 | £ 951 | 9% |
| 20 | Isle of man | £ 11,647 | £ 12,595 | £ 948 | 8% |
Across all age groups, the average loan size increased between 2019 and 2020, compared to the previous year, which saw a decline in all age groups other than 45-49 years. People aged 60 to 64 saw the biggest increase in 2020 to £ 1,200 (up 10% from 2019), however, borrowers aged 40 to 44 requested the highest amount, with an average of £ 13,610. By comparison, those under 30 claimed the lowest amounts ranging from £ 5,383 (17-19) to £ 10,354 (25-29) on average.
To help you understand how much a personal loan will cost and what you can afford, check out the MoneySuperMarket loan calculator.
