A report from insolvency trade body R3 has shown that British adults are twice as likely to take out a payday loan rather than take a loan from a credit union.
In a survey of over 2,000 British adults carried out by R3 and ComRes, 4% of them had taken out a payday loan in the past six months, compared to just 2% who said they had approached a credit union for a loan. This is equivalent to 1.9 million payday loans in the past six months and less than 800,000 loans from credit unions.
Appetite for new payday loans seems to be driven by younger borrowers, with 15% of 18-34 year olds saying that they are likely to take out a payday loan in the next six months.
Payday lenders have been under fire in recent months for the relatively high rates of interest that are charged on the loans that they offer. In addition, there has been criticism from some quarters about lending practices and the policies used by payday lenders to recover money owed to them at the end of a loan. Credit unions are largely seen as relatively benign lenders who offer much lower rates of interest however they have struggled to match the marketing clout and resources of the payday lending industry.
The report highlights that the rising cost of living is the main reason why people are turning to short term loans in order to get through to payday. Of the 43% of British adults who said that they struggle to get through to payday, 59% said that the rising cost of food was a problem and 52% said that household energy bills were to blame.
We see many people who have continued to borrow more money, when they should have stopped and found a way of dealing with their existing debt. To find out what options are available to help you, call us today on 01709 331300 for a free consultation.