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Payday Loan Statistics
A closer look at the facts and figures of payday loans
The average payday loan customer
CMA determined the typical characteristics of a payday loan and its borrowers through the analysis of their loans data. Whilst the single most common amount borrowed was £100, the average loan size was £260. 75% of the customers in their data took out more than one loan in a year with the average customer taking out 6 loans in a year.
What does the typical payday loan customer look like?
Where do customers typically access payday loans?
Payday loans can be accessed both online as well as off the high street. Whilst applying for a loan with high street payday lenders allows you to talk to a person in real life to help you assess your options, online lending could be a more convenient option as customers can apply for a loan from their home. The added benefit of online payday lenders is that you can quickly compare different lenders through comparison websites to help you choose the best option. The CMA reported 83% of payday loan customers took out a loan online whilst 29% took out a loan on the high street. An overlap of 12% of payday loan customers has used both channels.
What are payday loans used for?
Even though payday loans were designed as one-off loans for unexpected expenses, the actual result is quite different. An alarming proportion of people have admitted to using payday loans to cover recurring expenses. Over 1 in 2 (53%) borrowers reported “Living expenses such as groceries and utility bills” as their reason for taking out a payday loan. 2% of borrowers confessed to taking out a payday loan in order to pay off another one. Other reasons include car or vehicle expenses (10%) and general shopping such as clothes or household items (7%).
Why do they need payday loans?
Over half of borrowers (52%) said they had to take out a payday loan because they suffered an unexpected increase in expenses or outgoings whilst almost 1 in 5 (19%) said it was due to an unexpected decrease in income. Of those who said their need was due to a shift in financial circumstances, 93% saw this change as temporary. Almost 3 in 5 (59%) said their payday loan was for something that they could not have gone without. Even though almost 1 in 4 (24%) of these people said that they would have gone without the purchase if a payday loan had not been available.
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