5th February 2015
Nearly half of borrowers, at 44%, who took out a payday loan in the past year have used the cash to cover everyday essentials such as food and travel costs claims new research.
The analysis from the Debt Advisory Centre (DAC) has found that across the UK as a whole, 7% of adults – or 3.5m people – say that they have taken out a pay-day loan in the past 12 months.
There is a clear male / female split, with 9% of men but just 5% of women, saying that they have used payday loans in the past year. There is also a clear bias towards younger borrowers – 17% of 25-34 year olds have borrowed in this way, compared to 9% of 35-44 year olds and 3.6% of people aged 45-54.
When it comes to the reasons for borrowing, by far the most common was to pay for essentials such as food. A further 35% say they took a short-term loan to cover their rent or mortgage, and a further 22% to pay other bills. More worryingly a fifth of payday borrowers use the money to pay for a holiday and 5% to treat themselves.
Reasons for taking a payday loan
*Source: Debt Advisory Centre
Ian Williams, spokesman for DAC, says: “Many people who are struggling with money problems often put off tackling them – for example, believing that if they can just borrow some money to get through this month, then things will be better next month. However, for a great many people that simply isn’t true: if you have got to the stage where you need to borrow money to buy food or pay the rent, a loan isn’t the solution – it is time to seek expert help with you finances.”