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Payday Loans

10 Surprising Facts about Payday Loans in the UK

Payday loans are now mainstream, and practically everyone knows what they are, what benefits they offer, the downsides of payday loans, and where to find them. But we are not going to talk about that in this article. Here’s a different perspective on payday loans. It will surprise people and maybe even change what they think about them.

  1. Approximately 47% of the women that applied for a payday loan were widowed, single, separated, or divorced. There is no data on how many of those women were mothers with children, but it is fair to expect there are quite many single mothers that needed help to make it till their next paycheck.
  • 71.2% of all people that apply for quick loans were not married or in a civil partnership. This is based on around 180,000 payday loan applications. Out of these loan applications, 12% were in a civil union, whereas just 16.5% were married. Based on this, it pays to be married, and if nothing else, your cash problems won’t be as severe as others have it. 
  • Around 75% of all payday loan fees are generated by borrowers that had 11 loans or more. It is no secret that payday loan lenders make their biggest profit from borrowers that don’t pay on time than from people that do. This statistic only proves that it also witnesses how dangerous it is to get into the hamster debt wheel.
  • 44% of the nurses that applied for payday loans are with children. Their low salaries force them into taking payday loans to support their family. Many of those nurses are single mothers with no-one else to help them out. 
  • 18% of people with disabilities in the UK have used a so-called “high-cost loan” at least once in their lives. For comparison, only 5% of all people with no disability so ever reported that they had used a “high-cost loan.” Considering the fees and the high-interest rates, payday loans fall in the category of “high-cost loans.”
  • One of three students say that their parents don’t send them enough money. At the same time, many parents reported that they occasionally take a payday loan to send money to their children and support their education. 
  • 14% of people thought that they needed to provide collateral as security for the payday loan lender. 9% of those people thought that their credit card could be used as collateral. 4% of them even took things up a notch by saying that they would like to add their mother in law as collateral. Jokes apart, UK payday lenders can’t use collateral to secure a loan, let alone something as a mother in law.
  • 25% of all people don’t even know the meaning of APR. APR is a basic metric used by every banker and lander in the world. Financial literacy is at some of its lowest points, yet it defines everyone’s lives in so many ways. Not knowing that APR stands for the annual percentage rate is somewhat embarrassing and can be even costly.
  • The payday loan industry in the United Kingdom is worth £220 million. Its peak was seven years ago in 2017 when it valued at £2 billion. There is no exact number of people employed as part of the payday loan industry, but their numbers are in the thousands. 
  1. The coronavirus pandemic harmed the payday loans industry. Even though some people think that the payday loans industry would somehow benefit from the pandemic-caused economic crisis, that’s not the case. Unemployment is at record levels as 1.69 million people in the UK are unemployed. Being unemployed means that you can’t get a payday loan, which is why the pandemic has been bad for the payday loan industry.

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Carlton Grey has been a financial analyst and credit counselor for many of the UK's leading magazines ever since he hitched the freelancing bandwagon. He was once a columnist of Forbes, where he wrote on short term debt. On the weekend, he is the host of his podcast show, along with being his kids' favorite. He graduated from the London School of Economics in 2003 with a major in business economics, emphasis on account, and a minor in credit management. He has been featured many times on CNBC and BBC for his expertise on responsible borrowing.