Back to listing

04/12/2012

4 million UK adults intend to take out a payday loan to cover the cost of Christmas

The pressures of Christmas spending will drive 8% of UK adults into taking out a payday loan, according to new research by insolvency trade body, R3.

Louise Brittain, R3 Council member says:

“I am worried that so many individuals are intending to take a payday loan to cover the cost of Christmas. I would urge people to think again before taking out a high interest loan to pay for presents, partying or luxury food. If used in the right way, to fill a genuine one-off gap in finances, a payday loan does have a place. I would urge anyone considering a pay
day loan to cover Christmas to think of alternatives, as in the old days, that do not come with a hefty price tag.

“My concern is that a significant proportion of these individuals will not be able to pay off the loan in time – meaning they will need to take out another one or roll it over and could end up facing high penalty charges. We know from research last year that one in three of those who took a payday loan couldn’t pay off the first loan so had to take out another one.

“Payday loans are increasingly being taken as individuals are turned down for mainstream credit from their banks or credit card providers.”

These findings come at a time when the Government has recently announced it is considering a cap on interest rate charges, as an additional clause to the Financial Services Bill. Since this time a year ago, there has been approximately a 50% increase on the number of GB adults who say they are likely to ‘seek a payday loan in the next six months’, up from 3.5 million individuals twelve months ago to 5 million today.

Louise Brittain concludes:

“Debt has been normalised, attributable in part, to the clever marketing campaigns of the big payday lenders. These loan companies operate glossy websites and even sponsor football teams and are capitalising on a generational shift in attitudes towards saving and debt.

“I would urge those considering a payday to be sure they can pay it back on time and in full and if not consider all the options from careful budgeting all the way to statutory debt solutions such as an IVA or bankruptcy. Above all, seek professional advice rather than automatically taking another loan.”


For further information please contact:
Will Black, R3 Communications Manager
t: 020 7566 4215 m: 07917 422 485 e: will.black@r3.org.uk

Charlotte Towerton, R3 External Communications Officer
t: 020 7566 4203 m: 07918161 291 e: charlotte.towerton@r3.org.uk


Notes to editors:
– R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners.
– R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
– R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals. Website www.r3.org.uk


METHODOLOGY NOTE
GfK NOP interviewed 960 UK adults aged 18+ between 23rd-25 November 2012.
 


R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.