Payday loans on the decline in the West Midlands
THE popularity of payday loans could be starting to dip, with just 7% of adults in the West Midlands planning to take out such a loan in the next six months, a new survey has claimed.
Insolvency trade body R3 said its survey, which questioned more than 2,000 around the country, had shown figures in the West Midlands were down from 8% in October 2012.
R3 warns, however, that financial worries continue with over half (54%) of people in the West Midlands worried about their current level of debt. Of these respondents, one in 10 (10%) was concerned about their level of payday loan debt.
Nationally, demand for payday loans is highest amongst young adults, with 17% of 18-34 year olds likely to take out a payday loan in the next six months, compared to just 3% of those aged 35 and over.
For 18-24 year olds with debt worries, around one in five (19%) is concerned about their level of payday loan debt, up from just 8% in February and 14% in October 2012.
R3 president Liz Bingham said: “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 worrying that the age group with the biggest demand for payday loans is also the group where there is the largest concern about the impact of those loans amongst those that have already taken them out.
“Rent and study costs, along with a lacklustre graduate jobs market are the catalysts which force young adults to turn to short-term credit to fund day-to-day expenditure.”
Of the 94 UK adults surveyed by R3 that had taken out a payday loan, 51 said they had prioritised repaying their loan over food purchases in the last six months.
“In reality, payday loans are not the ‘lifestyle’ choice that they are sometimes promoted to be. Prioritising payday loan repayments over basic purchases suggests those with these loans already have serious financial problems. Payday loans might be appropriate in some circumstances, but they are certainly not appropriate for someone already in financial difficulty,” added Ms Bingham.
