Surprising new research has revealed that 50% of payday loan borrowers are white collar workers and professionals, and 7% of all payday loan borrowers are solicitors, accountants, doctors or financial advisers.
Controversial payday loans, with typical APR’s often stretching into thousands, are typically associated with students, the unemployed and lower income workers.
Experts have said that the fact that financial advisers – who take care of other people’s money for a living – are turning to this expensive form of borrowing is a sign that even financially-savvy high-earners are struggling to make ends meet against the backdrop of the recession.
The statistics, from payday loan company Speed-e loans, found that during the three months of February to May the top three borrower employment categories consisted of office workers and administration (23%), management (14%) and sales and marketing (13%).
The study also showed that 53% of all borrowers are female and the average income is £1,430 per month after tax.
Debt expert and director of Atlantic Financial Management, Kevin Still, urged people to be cautious about taking out payday loans, saying: “With a ‘typical APR’ of 2,334% it is very important to ensure you have the funds available when they look to debit your account for the repayment. Whilst the loan period is only up to your next, or following payday, and loans extend to a limit of £1,000 after the first advance, interest accrues very quickly and continues to do so after the missed payment.”
He added that most borrowers would likely have trouble keeping afloat with payments, and may have additional financial difficulties and mounting debt problems to contend with.
“It is a concern that so many professional people have to resort to this type of expensive debt finance to makes ends meet, especially if they have had a recent expenditure shock, such as a house or vehicle repair,” he continued.
“If people are considering very expensive stopgap financing to mask real debt problems then they should take professional debt advice and look a non-borrowing debt solution before the situation escalates out of control into a debt spiral.”
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