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PayDay loan applications soar in 2024

This article has been created by our MPO Money Mum & Dad to explain the main issues with PayDay loans, including the big impact that they can have on your credit score. We've also included a helpful list of alternative support services that can support families and parents who are struggling financially in 2024.

A photo of Daniel Sharpe-Szunko, the author

By Daniel Sharpe-Szunko

Published on: 25 June 2024

2 min read

PayDay loan applications soar in 2024

An alarming statistic reveals that more people in the UK are applying for PayDay Loans than mortgages in the past 6 months of 2024. A report from MoneyHub.com has highlighted that the number of households resorting to PayDay loans has soared in recent months.

The recent survey showed that 18% of Brits had applied for one of these PayDay loans which was more than the 10% who had applied for a mortgage. This statistic highlights the points that we have made in our recent articles about mortgage rates and the mortgage market, which is showing no sign of normalising soon.

The report also went on to explain that of the 18% of people who had applied for a PayDay loan:

  • 6% had been accepted for the credit
  • 4% were refused or declined
  • 8% were offered a more suitable product

Of the applications that were received by the PayDay loans companies, 27% had some sort of credit problem (e.g. missed payments, defaults, CCJ’s, or IVA’s) in the past 12 months. Again showing the sort of financial behaviour that UK households are having to resort to in order to manage their regular outgoings.

Typically, a PayDay loan is a very last resort and lenders will prey on borrowers by charging extortionately high rates. These agreements can charge interest rates of around 1,250 APR (Annual Percentage Rate).

Apart from the ridiculous interest rates, PayDay loans will also have a knock on effect on your credit score and credit rating. Mortgage lenders won’t normally lend to borrowers who have taken out a PayDay loan in the past 12 months.

Channel 4 covered the growing issue of PayDay loans in the UK in a documentary a few years ago, and a short clip of this can be seen in the video below.

25 Year Old Best Friends With Payday Loans | Save Well, Spend Better

If you’re in a situation where you need to resort to this type of short term lending, then you might want to consider seeking help. There are several free money advice services that you can refer to for help, such as:

There are also several other smaller independent charities or services that you can check out, including:

Our advice to parents and families who are in need of help or support due to their financial circumstances, check our guide to ‘Debt problems and how to get help’.

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