Payday loans are not just for the low paid
The survey by one payday lender said 7 per cent of payday loan applications last year came from people commanding generous salaries.
White collar workers made up half of those applying for the 35-day loan service, through which people borrow between £100 and £1,000 until their next pay packet arrives. Of those white collar applicants, 28 per cent worked in management, with more than a quarter (26 per cent) holding down jobs in sales and marketing.
Jason Gardiner, founder of short-term online lender FridayFriday.com who carried out the study, said the analysis contradicted the traditional view that payday loans are only used by the low-paid or jobless.
Gardiner said: “7 per cent of applicants are in high-end professions such as law, accountancy and medicine, and this just goes to show that, regardless of your income, there can be times when people need a short-term loan to see them through until their next pay day.
“People we’ve spoken to in these professions have stated that typically they’ve applied for a short-term loan due to an unforeseen cost increase, something which can happen to anyone regardless of the size of their salary.
“Half of all applicants are from white collar backgrounds, which reinforces just how widespread payday loaning is becoming.”
Consumer Focus figures indicate that the payday loans market increased from 300,000 borrowers in 2006 to 1.9 million in 2010. The industry has been accused of preying on those in financial trouble, prompting the Office of Fair Trading (OFT) to investigate whether some firms target people unsuitable for credit and are rolling over loans so that the charges escalate and they become unaffordable.
Payday lenders argue that they offer a much-needed service to customers, and their high-interest charges are often more transparent than those of mainstream banks.