Around 15% Of UK Borrowers Opting For Loan Sharks To Ease Financial Troubles
04 Mar 2020
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- A new study has found that around 50% of Britons have some form of outstanding debt at this time, excluding mortgage loans.
- Out of these, around 15% are using expensive borrowing through illegal lenders to ease financial troubles.
- Experts have instead recommended cutting back on unnecessary expenditures and/or borrowing from family/friends to repay outstanding debt.
As per information revealed by a new research study, around 50% of all British people are carrying some form of debt at this time, and 15% out of this group are now using illegal lenders to resolve their financial issues. The study, conducted by VoucherCodes
, had 48% of respondents stating they had at least one outstanding debt obligation on their shoulders, excluding any mortgage debt. Credit card spending made up most of these responses, with 78% stating they owed money on credit cards. Around 44% said they owed money on overdraft facilities. Other credit products and services that respondents said they currently owe money on included personal loans (42%), ‘buy now, pay later’ schemes (42%), and personal borrowing is done through family and/or friends (33%). The highest proportion of people that have some form of outstanding debt by region were found in Edinburgh, with 55% of residents stating they owed money on at least one form of credit product/service. Other regions that had more than 50% of residents with some form of outstanding debt obligation include Derby and Cardiff (53%), London (52%), Norwich and Belfast (50%), and Leeds and Manchester (50%). However, perhaps the most worrying finding of the study, according to experts, is the fact that around 15% of respondents said they had opted for loans from sharks, and now owed such illegal money providers around £744 on average. There are variations in the popularity of loan sharks by generation. Around 23% of millennials said they had gone to a loan shark to ease financial issues, the highest proportion of any generation. According to the study, millennials also find payday loans as well as ‘buy now, pay later’ schemes to be particularly attractive, with around 52% of respondents between the ages of 25-34 years who have said they have used the service. Respondents also answered questions about their perception of being in debt. Millennials
said they only considered themselves to be in debt if they owed an amount greater than £5,773, while those aged 55 and above had a 36% lower threshold stating if they owed more than £4,246, they classified themselves as being in debt. The study also inquired about behavior that would help those in debt get out of their financial troubles. Only 32% of those aged 18-24 years old, belonging to Generation Z, said they were willing to save more by cutting down on unnecessary expenditure, compared to 63% of respondents above 55 years of age. Around 42% of Gen-Z respondents said they preferred to use parental support to overcome financial issues than reduce expenses, while 9% said they considered having some form of debt to be an inevitable reality. However, experts are concerned that turning to loan sharks could worsen the debt issues being faced by debtholders, and instead recommend those facing issues with outstanding debt obligations to reduce unnecessary expenses or seek help from family/friends to repay outstanding debt than opt for expensive loan options.