Dundonians are UK’s least indebted

The research, commissioned by Shawbrook Bank, revealed that the average Dundonian household owes £980 in personal loans.

This is nearly £1,000 less than the amount owed by those in the Uxbridge area of London who, with an average debt of £1,911, have the largest outstanding loan debts.

The research also found the average value of outstanding loans per household increased between 2013 and 2017 by an average of nearly 19 per cent.

In Scotland, the amount outstanding has risen from £1,068 to £1,189 during this four-year period, representing an increase of 11 per cent.

But the research also found some borrowers may be paying more for their loans than they should.

In total, UK residents have outstanding unsecured consumer credit of around £209 billion, up from £196bn last year. Around £60bn of this is down to personal loans.

And the CEB/Shawbrook report found the average APR for a fixed rate loan is currently 7.3 per cent whereas the representative rates advertised by leading UK lenders for the average loan value of £9,000 ranges from 2.8 per cent to 4.9 per cent.

Paul Went, product and markets director at Shawbrook Bank, said: “The study reveals borrowers in Scotland are generally taking out smaller loans than households in other parts of the UK, while they also represent a smaller percentage of their annual income.

“But clearly Scottish borrowers may not be aware that they could be paying more for their loans than they bargained for.

“There is clear disparity between so-called representative rates and the rates borrowers actually end up paying. This is leading to confusion among loan applicants we surveyed in Scotland and is, arguably, misleading borrowers.”

He added: “The growing scale and significance of the personal loans market means that it’s more important than ever to ensure loan applications are as transparent as possible for people.

“A widening gap between expectation and reality when it comes to loans is bad for all concerned.”