July 2013
Featured in this insight: Financial services
Survey highlights risk of younger Britons taking out payday loans: According to recent finance market research by insolvency trade body R3, which questioned over 2,000 Britons, the popularity of payday loans has dropped in the last six months.
Overall, 7% of UK adults are planning to take out a controversial payday loan in the next six months, which represents a reduction from 11% in October 2012.
Despite this dip, demand for these types of loans remains high among the 18-34 demographic. In total, 17% of surveyants of this age group said they are planning to take out a payday loan in the next six months, compared with just 3% of people aged 35 or over.
Nevertheless, 19% of 18–24 year olds are concerned about their level of payday loan debt, which reveals an increase from 8% who felt that way in February and 14% in October 2012.
Regionally, the highest demand for payday loans is from residents of London (15% are likely to take out such a loan in the next six months), followed by the North West (10%) and North East (9%).
Further findings of the study were that only 7% surveyants thought a payday loan is responsible, and that 43 of the 94 respondents who already had a payday loan said that it had made their financial situation worse.
R3 president Liz Bingham commented: "Negative publicity about the risks of payday loans may be starting to affect their popularity. However, payday and other short-term loans remain a significant financial crutch for younger age groups.
It is very concerning that the age group with the biggest demand for payday loans is also the group where there is the biggest concern about the impact of those loans amongst those that have already taken them out. In this context, the demand for payday loans among young adults is worryingly high.”
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