Informal loans 'unlikely' to be paid back

Sam Jackson

November 22, 2010

November 13, 2018

Informal loans 'unlikely' to be paid back

People in the UK hand out an average of £2,250 in informal loans, which they are unlikely to ever receive back, a survey has shown.

Research by OnePoll showed that 40% of people who borrowed money off a friend or relative would not be able to repay it, with 24% admitting they would never pay it back.

A third of informal lenders said the loan had caused irreconcilable problems, with 70% saying they should have drawn up a contract beforehand to avoid the disputes.

A popular reason for borrowing money in this manner is having a lack of savings, with 31% of people saying the cash because they had failed to make provisions of their own. Meanwhile 22% of borrowers said they could not get an official loan from a financial provider and that is why they had to do it informally.

But nearly a quarter said they needed the money because their income did not cover their living costs, with many needing the cash to pay for food or rent, while 12% used it to pay off existing debt.

A third of parents said they had dipped into their savings to lend money to their children, while 12% said they had taken out a loan themselves in order to help out their offspring and 8% had run up credit card debt.

Sam Jackson

Money Dashboard

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