Why friends in need are banking on a loan

With payday loan companies charging up to 5,853 per cent APR, more than half the UK's population is turning not just to the bank of mum and dad but the bank of mates too. Around 57 per cent of us "often" lend to friends and family and one in ten have handed over between £250 and £1,000 to loved ones, figures from Gocompare.com reveal. More than a third of us have lent money to pay off someone else's debts and one in four have covered food, shopping or other bills.

But there are side-effects. A third of people said they had either fallen out with someone over money lent or knew somebody who had, which could explain why 60 per cent of those surveyed said they would be worried lending money to friends or relatives would damage their relationship. It may also explain why, despite punishing rates of interest, almost 20 per cent of us would take out a payday loan rather than ask a friend or family member for cash.

Separate research from uSwitch.com says that despite earning more, men have borrowed £769 more than women in the last year and people living in the East Midlands carry the least debt (£1,988) while those in Yorkshire and Humber owe the most (£2,902).

Comments