According to the new report, just under a third (30 per cent) of the personal loans taken out in the last quarter were for cars.

Home improvements were not far behind, encouraging just under a quarter (24 per cent) of personal loan holders to get borrowing, whilst debt consolidation was the reason for a further one in five people to take out a loan.

Nationwide also discovered that 2.4 million personal loans, totalling £13.5 billion, were agreed in the same period, leaving the total outstanding loan balance at the end of March 2005 at £93 billion.

“It appears that the personal loans market remains buoyant despite a gradual slowdown in other sectors of the economy,” commented Stuart Bernau, executive director of Nationwide.

“Whilst consumers are generally easing off from borrowing more and focusing on clearing existing credit commitments, personal loans appear to remain a popular vehicle for tidying up household finances in a relatively low cost and structured way.”

The average amount borrowed per person in a personal loan currently stands at £5,500.

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