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Payday loans have become ‘one of the default options’

PAYDAY loans have become one of the “default options” for struggling consumers, according to a leading figure at R3, the insolvency trade body.

15 April 2014
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An R3/ComRes survey of more than 2,000 British adults found that three per cent of adults in Yorkshire and the Humber said that they had taken out a payday loan in the last six months, compared with four per cent across the UK.

Three per cent of respondents in Yorkshire also said they had taken a loan from a credit union in the last six months, compared with two per cent nationally.

William Ballmann, the chairman of R3 in Yorkshire, said: “It is encouraging that in our region the percentage of people turning to credit unions rather than payday loans is higher than across much of the UK, however, more could still be done to promote this as an alternative solution for those struggling financially.

“Payday loans have become one of the default options for those trying to tide themselves over from one month to the next, but there need to be alternatives. While high-cost, short-term credit might be helpful in some circumstances, payday loans are not a long-term option. They only dig people struggling with debts into deeper holes.”

The survey also found that four per cent of adults in Yorkshire said they were likely to take out a payday loan in the next six months, a fall of two percentage points since the last research in January 2014.

This level is just half the UK-wide figure.

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