The popularity of payday loans is on the wane in the North West according to research by R3, the trade body for insolvency practitioners.
It shows the number of people using payday loans has been falling steadily since its peak 18 months ago. Just two per cent of adults in the region said they had taken out a recent payday loan in R3’s latest survey – down from eight per cent in September 2013.
An equal amount of adults in the current survey (2%) said they had taken out a loan from a credit union, which may indicate that consumers are seeking out less costly sources of finance.
The figures come days after payday lender Wonga reported a loss of £37.3m for 2014 and predicted more losses in 2015. They are also in line with figures from the Consumer Finance Association, the body which represents payday lenders, and which says that the number of loans approved has shrunk by 75% from its peak in 2013.
Richard Wolff, North West chair of R3 and Head of Corporate Recovery and Insolvency at law firm JMW, said: “Payday loans have been steadily falling in popularity with consumers. More recently the decline could be related to the new regulations on payday lending which came into force in January and aims to protect vulnerable lenders.
“Over the longer term it could be that there is less demand for payday loans as household finances are improving – our figures show that the amount of people who say they struggle to make it to payday has fallen from 51% to 38% in the past 18 months. Another factor might be that consumers are becoming savvier about the cost of payday loans and looking for lower-cost sources of finance instead.”
The survey was carried out by ComRes which interviewed 2,011 adults across Britain, including 235 in the North West.