Increased demand for car finance

The total amount of car finance and other forms of unsecured borrowing has increased in recent months.

Financial services provider the Fair Investment Company reveals that, as of the end of August 2008, UK consumers have approximately £5,886 to their name in car finance, unsecured loans and credit card debts. Twelve months ago the figure stood at an average of £4,524 per person.

The increasing demand for car finance and other forms of borrowing is more than likely down to increased living costs, according to the organisation that carried out the survey. Matt Edwards, a spokesperson for the Fair Investment Company, commented: "As people contend with rising fuel and food costs, it is no surprise that they have to borrow more.

"However, the downside of this will be the interest rates that could soon eat into people's pockets."

While car finance is a long-standing method of paying for an essential vehicle that might otherwise be unaffordable, it is still advisable to keep a sum of money to one side to cover any unexpected expenses. Moreover, keeping such a sum will help make sure car finance repayments can be met.