Payday loan statistics: How many people use them in the UK?

A closer look at the facts and figures of payday loans, including the number of people using them and the average loan amount.

Payday-style loans (or high-cost short-term credit) are short term lending for small amounts of money. These loans can be accessed quickly, even by those with bad credit or lower incomes, and are designed to be paid off in one month or less. We look at the latest payday loan statistics in the UK.

Quick overview

  • 1.1% of UK adults had a payday loan in 2022, which is around 585,000 people, down from 1.8% of UK adults in 2020.
  • 18- to 24-year-olds were the most likely age group to take out a payday loan in 2022 (2.1%).
  • The main reason for taking out a payday loan in 2022, given by 1 in 5 (20%), was to cover everyday expenses.
  • The main reason for choosing a payday loan over another form of credit, given by 21% in 2022, was that the recipient would likely be eligible for the credit.
  • Two-thirds of recipients (32%) shopped around before taking out their payday or short term instalment loan in 2022.
  • 5.4 million high-cost short-term loans were taken out in the year to June 2018.
  • The average payday loan amount was £250 in the year to June 2018, while the average amount payable was 1.65 times higher at £413.
  • The average APR for a payday loan is around 1250%.

How many people use payday loans in the UK?

In 2022, 1.1% of UK adults had taken out a payday loan, which equals around 585,000 people. This was down 7 percentage points from 1.8% of adults who had taken out a payday loan in 2020.

Men are slightly more likely to take out a payday loan than women, with 1.2% compared to 1.1%, but there is not much difference between the genders.

Payday loan statistics: Age breakdown

18- to 24-year-olds are the age group most likely to take out a payday loan, with 2.1% applying for one in 2022. They are closely followed by 25- to 34-year-olds and 35- to 44-year-olds, as 1.9% of each of these age groups had a payday loan in 2022.

The likelihood of taking out a payday loan decreases with age, as just 0.8% of 35- to 44-year-olds, 0.3% of 55- to 64-year-olds and 0.4% of those aged 65 and over took out a payday loan.

There has been the biggest drop in those taking out payday loans among 25-34-year-olds since 2020, as 3.8% of this age group had taken out a short term loan of this kind in 2020.

Age group Percentage with payday loan
18-24 2.10%
25-34 1.90%
35-44 1.90%
45-54 0.80%
55-64 0.30%
65+ 0.40%

What is the average payday loan amount?

The FCA reported that the average amount for a payday loan was £250 in the year to June 2018. The average amount payable for a loan, however, was £413 in the same period.

What is the average APR for a payday loan?

According to FCA figures published in 2019, the average APR for a payday loan is around 1250%. The APR for a payday loan tends to be much higher than other forms of credit because they are short term loans designed to help with small, unplanned expenses, and the idea is that you pay them off quickly.

Why do people take out payday loans?

There are a variety of reasons why someone might take out a payday or short term instalment loan. The most common reason, given by 1 in 5 (20%), was to cover everyday expenses such as food, transport, bills and socialising. This is alarming because they are generally designed to cover small, unexpected expenses and sudden events rather than daily living costs.

Other common reasons for taking out a payday loan included paying off debt (14%), paying for home improvements (14%), treating themselves or buying gifts for other people (14%) and paying for an unexpected expense such as a broken car. 1 in 10 people (11%) also took out a payday loan in 2022 to put towards a one-off large expense, such as a wedding or holiday.

Main reasons for taking out a payday loan 2022 Percentage
To cover everyday expenses, e.g. food, transport, bills, socialising 20.00%
To pay off a debt 14.00%
Home improvements 14.00%
To treat myself, or other people, eg gifts for family or friends 14.00%
Unexpected expense, eg broken boiler or car 14.00%
One-off large expense, eg a holiday, car, wedding 11.00%
To pay off most or all my other debts – debt consolidation 7.00%
To help friend/ family member 7.00%
To cover rent or mortgage payments 6.00%
To pay for medical treatment(s) 2.00%
To pay for habits such as gambling 1.00%
Can't remember 20.00%

Why do people choose payday loans over other types of credit?

When asked why they had opted for a payday loan or short term instalment loan rather than a different form of credit in 2022, 21% of the group said they chose it because they were likely to be eligible for the credit, while 1 in 5 (20%) chose it for the affordability of repayments.

In 2022, a third (32%) of adults who took out a payday loan said they had shopped around beforehand, comparing products from 2 or more providers in terms of the features and the price. 1 in 5 (20%) said that they were approached directly by a loan provider about taking out their product.

Main reasons for taking out a payday loan 2022 Percentage
To cover everyday expenses, e.g. food, transport, bills, socialising 20.00%
To pay off a debt 14.00%
Home improvements 14.00%
To treat myself, or other people, eg gifts for family or friends 14.00%
Unexpected expense, eg broken boiler or car 14.00%
One-off large expense, eg a holiday, car, wedding 11.00%
To pay off most or all my other debts – debt consolidation 7.00%
To help friend/ family member 7.00%
To cover rent or mortgage payments 6.00%
To pay for medical treatment(s) 2.00%
To pay for habits such as gambling 1.00%
Can't remember 20.00%

Sources

      • Financial Lives 2022 survey
      • Financial Conduct Authority (FCA)

Click here for more research. For all media enquiries, please contact:

Matt Mckenna
UK Communications Manager
T: +44 20 8191 8806
matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

Written by

Emily Herring

Emily Herring is a Publisher at Finder specialising in credit-based products including credit cards and business and personal loans. Emily has recently joined the Investments team. She has a Masters in Creative Writing & Publishing and a Bachelor of Arts in Communication & Media. See full profile

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