Demand for personal loans is likely to continue despite the worldwide credit crunch, a new report has revealed.

Research conducted by Datamonitor has shown a "record" £7.5 billion was borrowed through unsecured loans in 2006, the Press Association (PA) reports.

The analyst anticipates the market will now grow by five per cent a year – meaning by 2011 total advances could reach £10.2 billion.

Author of the report Maya Imberg told the PA the current credit crunch was only likely to affect the market for a short while.

"The UK secured personal loans market continues to portray an encouraging future in the long term," she said.

However, for those who would like to escape their debt situation, an individual voluntary arrangement (IVA) could be a way out.

An IVA is a formal agreement with creditors which allows the debtor to become debt free within a certain amount of time and to make repayments at an affordable rate.