With the great downturn in the property market, more homeowners are looking to improve their homes instead.

Yet with the recession leaving more Brits struggling for cash as they struggle to get loans, the number of people opting for "buy now pay later" deals is rising, along with the number of firms offering the deals.

Buy now pay later deals on the rise

According to figures from the Finance and Leasing Association (FLA), in-store credit rose by 24 per cent in March compared to the same month in 2008.

And as the credit crunch continues to bite, the buy now pay later loans, or hire purchase (HP) loans are becoming increasingly popular.

Geraldine Kilkelly, head of research at the FLA stated that "Overall, consumer finance is still being hit by the downturn."

She said: "With a depressed housing market, many people are choosing to improve their homes and replace furnishings rather than move house."

She added that "Retailers and lenders have been offering attractive interest-free credit and deferred payment deals on store instalment credit."

"We have seen a similar trend in recent months in the motor market. The proportion of car sales represented by instalment-type credit available in the dealerships has grown from 48% to 54% over the last year. This is mainly a response to competitive pricing and reduced availability of other sources of credit."

Some of the deals offer customers to put down only a small amount of cash upfront for items such as televisions and sound systems. Others even provide zero per cent payment deals where customers do not need to pay money upfront for such items.

However, these customers would be paying a higher rate of interest with their repayments, meaning that their overall repayment will be more costly in the long run.

Brits expected to end up in deeper debt

According to Chris Tapp, of charity organisation Credit Action, the move could leave Britons landing themselves in more debt as a result.

He said: "It is no surprise that this is an area which is growing during the credit crunch, but it can be more costly in the long run."

And if they fail to keep up with their re-payments, HP borrowers could risk having their products taken back by the provider as customers do not own the items until the amount has been fully repaid. In addition to having the produuct taken back, the borrowers lose their intial installment, which could seroiusly leave them out of cash.

And to make matters worse, the shortage of lenders are pushing thousands of Brits to opt for illegal loan sharks.

A recent report by think tank, New Local Government Network, stated that 35,000 more borrowers will be turning to the loan sharks as a result of the recession.

Chris Leslie, of the New Local Government Network, said: "The pernicious trend of illegal unsecured lending at extremely high rates of interest is making a comeback.

"The diminished availability of sub-prime loans is creating conditions where a sizable number of people have little option but to borrow from these illegal sources."

Tom Howard, of the debt charity, Consumers Credit Counselling Service, said: "The shortage of players in the sub-prime market is hitting borrowers who are most at risk.

"It is all too easy for these consumers to fall into a spiral of debt, which is not helped by the astronomical interest rates charged by these lenders."

Debt organisations are now advising borrowers in Britain to prioritise their loan re-payments.