New research from lending firm, Creditspring has been published during Debt Awareness Week to shed light on the fact that two million UK adults have borrowed from illegal lenders in the last 12 months. Given that 15 per cent (7.6) million of the population will need to borrow to get by over the next six months, Creditspring is calling for more affordable borrowing options.
The research comes as Creditspring revealed that nine per cent of parents with children under 18 have had no other choice but to turn to illegal lenders. This is double the UK average of four per cent, prompting concerns over the long-term financial stability of many families. The research also reveals that almost four million parents say they will need to borrow to survive the next six months, ahead of the expensive Easter holidays.
A third of parents (33 per cent) were reliant on borrowing from friends and family in the past year, higher than the UK average of 21 per cent, and three in 10 (28 per cent) borrowed from their bank compared to 16 per cent of all UK adults.
Additionally, one in five (19 per cent) parents also say they won’t be able to afford Easter trips with their children this year as the cost of days out and holidays soar once schools close.
Lack of affordable credit options
With the growing reliance on credit, particularly during periods of greater outgoings such as Easter, it is vital that people have access to transparent and affordable borrowing options. However, over a third (35 per cent) of people say they don’t know where to turn to access short-term, affordable credit.
The lack of access to affordable credit options risks driving parents and financially vulnerable people towards expensive options or even illegal lending as they struggle to make ends meet.
Neil Kadagathur, CEO and co-founder of Creditspring, comments: “Parents facing a major spike in costs during the Easter holidays will need financial support to get by; however, the number of people who are forced to turn to predatory and illegal lenders is a huge cause for concern.
“After years of rising living costs, all households are increasingly reliant on credit to survive – they need more support to ensure they aren’t forced into punishing debt spirals that can have a crippling long-term impact on their financial stability.
“Responsible credit provides a lifeline in this difficult financial climate, but too many borrowers have limited access to affordable and transparent options, instead relying on high-cost loans which end up worsening an already challenging situation.”
Support is available
Creditspring’s Benefits Finder helps ensure users have access to all the available financial support they may be entitled to but have yet to claim by identifying benefits they maybe be eligible for. Since launch in Q4 2023, the tool has located £1.9billion in additional financial support. On average, the tool has found that individuals could be entitled to £973 per month in additional financial support.
Creditspring’s model offers an FCA-regulated credit subscription service that responsibly offers short-term, affordable credit to borrowers. Members pay a fixed membership fee every month to allow them to access two no-interest loans per year with clear repayment terms, capped total costs and no hidden charges, late fees, confusing interest rates or risk of debt spirals.
Richard Lane, chief client officer at StepChange Debt Charity, adds: “At StepChange we know how difficult things are for families across the country, and how debt can push people into desperate measures to cope with financial hardship. There’s a clear need for safe and affordable credit alternatives that can prevent those on low incomes from being forced to turn to illegal lending.
“This Debt Awareness Week, we’re focusing on breaking down the stigma and barriers that prevent people from seeking debt advice. Too often, fear and shame stop people from getting the support they desperately need. We urge anyone struggling with debt to reach out to StepChange. Free, impartial advice is available, and it can make a real difference.”
