Responsible Finance

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One in four 18-24 year olds likely to seek a payday loan

13.11.2012

The number of British adults who say they are likely to seek a payday loan in the next six months has risen from 3.5 million individuals to 5 million since this time last year, according to new research from R3, the Association of Business Recovery Professionals.

Their use is much more evident among the 18-24 age group (26% are likely to seek a payday loan in the next six months) while just 4% of those aged 45 and over are likely to do so.

Louise Brittain, of R3’s Council, said, “They are increasingly being taken on as a debt solution instead of a financial solution. We know from last year that one in three couldn’t pay off the first payday loan so had to take out another one – and now 12% of 18-24 year olds have prioritised paying back this debt over buying food in the past six months.

“This is a million miles away from the supposed purpose of payday loans, which providers claim ‘smooth over financial peaks and troughs’. Instead, expensive loans taken with easy internet or smart phone access are forcing some debtors into making difficult choices.

“If money has to be spent paying back these debts ahead of food, clothing, gas or electricity then these loans aren’t doing their job, and are in fact only exacerbating a difficult situation. This is stands a greater chance of being resolved by seeking professional advice and considering all the options including a formal debt solution, above taking on further expensive credit.”

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