Research by easyMoney reveals that the cost of living crisis means 28% of people with personal loans are, at the very least, struggling to pay them back and many others have already been referred to debt collection agencies.
easyMoney has commissioned a survey of 6,479 members of the UK population to find out how the current cost of living crisis is impacting people’s ability to repay personal loans.
The results show that 18% of us currently hold some kind of personal loan.
The majority of those people (67%) hold just one loan, but one in five (20%) say they hold two, while the remaining 13% hold more, including 3% who hold five or more outstanding loans.
The most common type of loan people in the UK hold is a basic personal loan provided directly to them from a finance provider such as a bank.
The second most common loan is vehicle finance, followed by debt consolidation, buy-now-pay-later loans, payday loans, and bad credit loans.
When asked whether the current cost of living crisis is impacting their ability to repay their loans, 28% say ‘yes’.
Of those, 66% say the cost of living has meant they have struggled to meet loan repayments, while one in five (20%) have actually missed repayments.
A further 14% confirm that the crisis has actually forced them to default on their loan which has now been passed to a debt collection agency.
Jason Ferrando, CEO of easyMoney says:
“It’s such a difficult time for people who owe money to financial institutions. A loan repayment scheme that was once very affordable has, as a result of rising interest rates, become an incredible burden leaving too many people in financial distress. Never has the phrase ‘unforeseen circumstances’ carried more weight.
We would recommend that people who are considering taking out personal loans take time to consider the decision carefully. With such economic uncertainty in our immediate future, how far can your monthly budget stretch when it comes to repayments?
The flip side of high interest creating an ecosystem of expensive borrowing is, of course, better returns on investments for those fortunate enough to have some money set aside. Cash ISAs are being offered at very attractive rates, but these are incredibly short-term, rarely guaranteed beyond 12 months.
That’s one reason for us seeing such a surge of interest towards alternative investment avenues such as Innovative Finance ISAs. Not only do average rates surpass those offered by even the most generous Cash ISA accounts, but by taking your investment out of the mainstream financial systems means they’re much less susceptible to negative economic movement, thus giving you a much better chance at enjoying good returns in the short, medium and long-term.”