Earlier this month, Payday Pixie released an article on the most common reasons as to why UK consumers turn to payday loans. The reasons varied massively especially between different age groups, for example 18 – 25 year old’s were turning to payday loans due to overspending on their monthly income, whereas older age groups 35’s and above were turning to payday loans due to emergency and unexpected bills such as car and home repairs.
Our research also found that 45% of UK consumers who actively use payday loans as an alternative method of finance are also homeowners. These finding will come as no surprise to many UK homeowners as the cost of living and monthly utility bills continue to rise year on year leaving many people with no option but to turn to borrowing additional finances.
With our recent report documenting the difference between different age groups and their borrowing habits, we decided to further document what the most common five ten reasons were for people needing to turn to additional finances throughout the UK.
Top Five reasons for a Payday Loan
Monthly Utility Bills
The number one and most common reason for UK consumers turning to payday loans and short term finance were sudden increases in their monthly utility bills. Utility bills will vary from month to month depending on how much gas, electricity and water that you use. These types of bills are massively influenced by month and seasons with electricity and gas bills seeing a sharp increase in the winter season due to the darker and colder weather.
Many people who used payday loans to meet monthly utility bills also stated that they were sometimes surprised with how much their monthly bills can increase by and found it harder to keep track of the costs and repayments due to them changing month by month. Utility bills are generally the hardest costs to accommodate for, unlike a phone contract or mortgage payment these costs are consistently changing on a month to month basis and are extremely hard to know exactly how much will be charged at the end of the month.
Monthly Mortgage and Rent Bills
With the cost of living becoming ever so more increasingly expensive, short term loans and payday loans are seen as a fast alternative to cover a small portion of the costs towards mortgage and rent bills. London was the number 1 hotspot within the UK for people that took out a payday loan just to cover their monthly mortgage or rental payments due to its astoundingly high cost of living. The average price of renting a flat in the city centre is nearly double that of any other UK city with an average rental value calculating £1500 per month.
Although payday loans are never ideal to help cover the full cost of a monthly mortgage or rental payment, they can be a suitable alternative to help cover a portion of the monthly cost.
Weekly Grocery Shopping
There has been a sharp rise within the last 15 months of people using additional finances to complete their weekly grocery shop. Although credit cards are still the most popular choice, payday loans are fast increasing in popularity due to their small borrowing amounts and short repayment terms. Understandably this mainly effects UK families that need to feed their children as well as their selves on a weekly basis.
Many of the finance experts here at Payday Pixie were expecting one of the main reasons for people to turn to additional finances to be related to unexpected bills such as car breakdowns, MOT’s, home improvement repairs (boilers, plumbing, electricity). Unexpected bills can take everyone by surprise and will always play a part in causing some form of financial difficulties for many individuals throughout the UK.
Some of the most common emergency bills include car repair bills and boiler repairs, both of which are essential to everyday life which is why it costs so much to get them repaired in such a short notice. Many people get caught out by emergency bills by failing to save a small part of their monthly salary as a financial cushion should there be a need to pay an unexpected/emergency bill. Take a look at our recent blog post on how you can soften the blow and cope with unexpected monthly bills
One off Purchases
Surprisingly people are also turning to short term finance methods such as payday loans to fund one off purchases which include products and services. The value of the purchases value from £50 up to £2000.
There are a massive range of purchases that fall into this category from children’s school uniforms, to cosmetic procedures to even holidays. Although one off purchases traditionally would have been funded through a personal loan granted from a large UK lender or Bank, people are now turning to the short term lenders who are able to borrow in smaller amounts for a shorter period of time.
There are many different reasons as to why people need to turn to additional finances from overspending to covering the cost of those surprising unexpected bills. Many people will at some point in their life experience some form of financial difficulty and will require assistance from financial experts in order to guide them through what can potentially be a very stressful time.
Here at Payday Pixie we understand the need for a fast reliable financial service in which we can put people at ease when it comes to applying for a payday loan. Whatever financial stress you are experiencing you can contact our team of finance experts for further advice.
Alternatively we provide a safe and secure online platform to enable you to apply for a payday loan online stress free.