In the red

Record personal loans due to 'money dysmorphia"

- BY LARISSA NOLAN

A RECORD €2.5billion worth of personal loans were drawn down in 2024, according to latest figures from Banking and Payments Federation Ireland.

It's a 20% increase in the value of personal loans compared to 2023, with borrowings to fund cars, home improvements, holidays and weddings.

Finance guru Nick Charalambous says the rise could be down to “money dysmorphia”.

“It could signal more than just consumer confidence, it may also be a red flag,” says Charalambous, Financial Advisor at Alpha Wealth.

“This kind of upward trend often reflects deeper financial pressure or a distorted perception of personal finances, what we call money dysmorphia.

“Money dysmorphia, a growing behavioural trend, refers to the disconnect between how people feel about their financial position versus the reality.

EMERGENCY

“It leads some people to overspend to maintain appearances or lifestyle standards, even while carrying debt or lacking basic savings.

“We're increasingly speaking to clients who are financing new cars and expensive events because they think they're doing fine, when in fact they have no emergency fund and aren't contributing to a pension.

“Money dysmorphia isn't about making bad choices, it's often about not seeing the full picture.”