Demand for payday loans in North East soaring

New research has found that demand for payday loans amongst young adults in the North East has soared.

Despite overall popularity falling by a third over the past nine months, 9% of 18-24 year olds in the region say they are likely to take out a payday loan in the next six months.

The figure is topped only by London (15%) and the North West (10%), the survey, of over 2,000 people, by insolvency trade body R3 found.

For 18-24 year olds with debt worries, almost one-in-five (19%) are concerned about their level of payday loan debt, up from just 8% in February and 14% in October 2012.

Steve Ross, North East chair of R3 and a partner in the Restructuring department of the Sunderland office of accountancy firm RSM Tenon, says: “Negative publicity about the risks of payday loans may be starting to affect their popularity, but payday and other short-term loans remain a significant financial crutch for younger age groups.

“It is very concerning that the age group with the biggest demand for payday loans is also the group where there is the biggest concern about the impact of those loans amongst those that have already taken them out.

“In this context, the demand for payday loans among young adults is worryingly high, and it’s a particular concern in an area where their profile is so high for obvious football-related reasons.

“Payday loans are not, in reality, the ‘lifestyle’ choice that they are sometimes promoted to be. Rent and study costs, along with a lacklustre graduate jobs market are the catalysts that force young adults to turn to short-term credit to fund day-to-day expenditure.

“While they might be appropriate in some circumstances, they are certainly not appropriate for someone already in financial difficulty.

“For the majority of people with a payday loan, taking one was the ‘choice’ of last resort as they couldn’t get credit elsewhere, and in this situation, such a loan could just make debt problems worse.”

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