Demand for taking out payday loans continues to fall
The number of British adults considering taking out a payday loan in the next six months has fallen again, according to research carried out by R3, the insolvency trade body.
6% of British adults say that they are likely to take out a payday loan in the next six months, down from a peak of 11% in October 2012 and 7% in June 2013.
Liz Bingham, R3 president, says: “It’s encouraging that demand for payday loans is falling. It may be that negative publicity and high profile interventions on the topic from politicians are starting to cut through.”
“Personal insolvencies have been edging up over the past year, so you might have expected demand for payday loans to rise too, as those struggling financially look to cover any shortfalls in income.”
Liz Bingham adds: “By comparison, concerns about bank loan debts and overdrafts have both increased since the last survey. People may be turning to more traditional sources of credit again.”
The highest proportion of British adults who say that they are likely to take out a payday loan in the next six months remains those aged between 18 and 34. 13% of those in this age group say they are likely to take out a payday loan in the next six months. However this is down from 17% in June 2013 and 24% in September 2013.
By comparison, only 4% of British adults aged 35 and over say they are likely to take out a payday loan in the next six months.
Liz Bingham says: “It is still a matter of concern that payday loans are disproportionately attractive to younger generations. It may be that other sources of finance, such as traditional bank loans, aren’t available to these age groups, many of whom will not have had a chance to build up a decent credit rating. High-cost credit shouldn’t be the only option.”
“While payday or other high-interest loans are appropriate in some circumstances, they are not appropriate for all borrowers or in all circumstances. It’s very important that the payday loan industry takes greater responsibility to explain to borrowers not only the initial cost of taking out a loan, but all potential costs too, including the costs of loan ‘rollovers’ or late payment charges.”
The number of people actually taking out payday loans has remained consistent, with 5% of British adults saying that they have taken out a payday loan in the last six months, the same as in June.
- R3 is the trade body for Insolvency Professionals, and represents 97% of 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 one of nine recognised professional bodies.
- R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.
- ComRes interviewed 2,006 GB adults online between 27th and 29th September 2013. Data were weighted to be demographically representative of all British adults aged 18+.
- ComRes is a member of the British Polling Council and abides by its rules (www.britishpollingcouncil.org). This commits us to the highest standards of transparency.
- Data tables are available on the ComRes website, www.comres.co.uk