As many as 3.5 million people across Britain have taken out a payday loan and many of them used the money to pay for their rent or mortgage, a new survey found.
Meeting rent or mortgage obligations was the top 2 reason for UK adults to seek out the services of a payday lender, new research from the Debt Advisory Centre (DAC) revealed.
The most common reason for taking out a payday loan was to buy essentials, with 44 per cent of the survey respondents choosing that answer.
Younger borrowers were the most likely to use a payday loan. As much as 17 per cent of borrowers were aged between 25 and 34, which is nearly twice as high as the proportion of 35- to 44-year olds (9 per cent). Older people were least likely to make use of a payday loan with only 3.6 per cent of 45- to 54-year olds going to this type of lender.
“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,” Ian Williams, spokesman for DAC, commented.
Reasons for taking out a payday loan:
| To buy essentials (e.g. food or travel) | 44% |
| To pay rent / mortgage | 35% |
| To pay bills | 22% |
| For a holiday | 20% |
| To repay other unsecured debts | 18% |
| For a one off emergency (e.g. boiler repairs) | 13% |
| To buy kids Christmas / Birthday presents | 12% |
| To treat myself (clothes, shoes, handbag etc.) | 5% |
| I owed somebody money | 3% |
