An increasing number of Brits are resorting to payday loans to manage day-to-day expenses
More people have applied for payday loans than mortgages in the last 6 months
Many applicants are being directed to other financial products or being outright rejected
This trend underscores the precarious financial situation faced by many in the UK.
New research from Moneyhub has shed light on a concerning trend emerging in the UK; a significant number of Brits are increasingly resorting to payday loans in order to manage their day-to-day expenses.
These findings have revealed that in the past six months, more individuals have applied for payday loans (18%) than mortgages (10%), highlighting the precarious financial situation faced by many.
Of the 18% who applied for payday loans, 6% were accepted, with 4% being rejected outright and 8% being offered a different, more suitable product. Furthermore, over a quarter (27%) of respondents reportedly engaged in risky financial behaviour, such as missing credit card payments or defaulting on a personal loan in the last 12 months.
These findings highlight the urgent need for financial services providers to better identify and support vulnerable customers. While some applicants were directed to more appropriate financial products, the numbers indicate that this effort is not sufficient.
Suzanne Homewood, Managing Director of Decisioning at Moneyhub comments: “As more people become reliant on payday loans, it is crucial that providers spot risky financial behaviours and identify potentially vulnerable customers ahead of time.
“By moving away from traditional methods of credit checking, we’d likely see an increase in providers recommending better-suited products and services for their customers' individual situations. This is because they will be able to understand their customer's true and holistic financial world and identify potential risks. Not only will this help businesses ensure they are truly supporting customers and putting their best interests at heart and in line with consumer duty obligations, but prevent consumers from getting themselves into financial trouble through defaults.”
“Moneyhub's Open Banking data insights provide lenders and collections teams with an incredibly clear view of an applicant's ability to afford or continue to pay for the service or product. We want to see more organisations using services like this before they commit their customers to products that just aren't suited to them. Financial vulnerability can't be easily eradicated, but it can be positively impacted by using new tools available to them.”
-ENDS-
Notes to editors
Contacts
Helen Miller Eleanor Ross
Marketing Director, Moneyhub Senior Account Director, Teamspirit (Moneyhub PR Agency)
Helen.miller@moneyhub.com ERoss@teamspirit.uk.com
M: +44 7393 758 446
About Moneyhub
Moneyhub is a data, intelligence, and payments company which develops ISO 27001 certified software for Open Banking, Open Finance, and Open Data applications. Its FCA-regulated Open Data platform enables companies to quickly and easily transform data into personalised digital experiences and initiate payments. Its APIs and fully customisable platform provide data aggregation, insights, notification nudges, and payment systems. As a result, clients have the consent-driven data and analytics they need to create super-personalised offers, products, and services. Hundreds of organisations, spanning finance to media and retail, rely on Moneyhub’s award-winning technology.
For more information, please visit www.moneyhub.com.