Over 85% of polled applicants were not aware of their loan APR!
(PRWEB UK) 11 May 2015
Readies.co.uk – a UK based loans comparison website, recently polled payday loan applicants to find out who they were, what their loan was for, and how much they knew about the loans. The results were surprising and unexpected.
Of the 10,000 applicants surveyed, over 85% were not aware of their loan APR or even worried about it, and more than two thirds had failed to pay back a previous payday loan as agreed. Additionally, almost 60% of those surveyed were unemployed (38%) or students (21%), either council tenants (30%) or living with parents (20%), surprisingly similar figures given the scope of the survey. Spending purposes were overwhelmingly in favour of social or substance needs, followed by almost 25% indicating their purposes as satisfying other payday loan obligations.
The original intent of the survey was to find out just how much the applicants knew about the loan they were taking out, along with a few other personal questions about their residential status, current employment and intended usage of borrowed funds. Whilst unexpected and distressing, the results do paint a clear picture as to the nature of the payday loan industry and average borrowers.
Overall these results indicate that the problem is not with loan applicants or APR, but rather with payday lending companies extending credit to unqualified individuals who have no real means of repaying their loans. Additionally, the amount of council tenants and people living with parents who needed to take out a payday loan is astonishing.
Too often the media has a blanket view of the payday industry as a whole and how it is handled. Lack of transparency when it comes to interest rates appears to be a common and recurring theme but as the Readies poll shows https://www.readies.co.uk/poll-results/id-2/, it isn't something applicants particularly care about. For the most part, applicants are keen to get as much money as possible and aren’t worried about interest rates, affordability or being able to pay the loan back.
From the questions asked the most enlightening answers came from past use or intended usage of the loans applicants were seeking. Whilst common consensus and marketing have payday loans as a way to tide borrowers until payday or provide a helping hand should an unexpected bill arise, the Readies results show that this is not at all what these loans are being used for. Instead, borrowers are far more concerned with getting the most money they can to satisfy social needs.
Out of the 14 potential answers for payday loan usage, the most popular were:
- Alcohol (4,564 votes)
- Tobacco (3,338 votes)
- Eating Out (2,374 votes)
- Socialising (2,234 votes)
- Paying Off Other Payday Loans (2,401 votes)
Where one might expect that a large percentage of potential applicants to be between jobs or in need of a loan to cover outgoings until they find work, the unemployed applicant figures in comparison to those in full time employment is staggering. This is surprising, as one of the requirements of being approved for a payday loan is having a pay stub.
Contrary to common perception, interest rates for these loans appear to be just the smallest part of the issue. The real problem is more at the source, where people who are not even eligible are being granted loans with no income on hand to be able to service them. This is surprising, as one of the main stigmas attached to the payday lending industry is the interest figure.