More people turning to loans to cover day-to-day costs

Rising living costs are forcing many people to take out a loan to make ends meet.

According to Go.Compare Money, one in three Brits (33%) have taken out a loan in the last three years.

Of course, people borrow money for all sorts of reasons and many will comfortably be in a position to repay it.

But figures show that some are turning to loans because of financial difficulties, such as being hit with an unexpected bill (6%).

Meanwhile, 5% of these people have taken out a loan to cover day-to-day living costs, and 4% have used them to help pay off other debt.

Who is most likely to be borrowing?

Men were more likely to have borrowed than women, with 38% found to have taken out a loan, compared to 28% of women.

Figure also show that younger adults are more likely to use loans than older people.

In fact, 51% of 18 to 24-year-olds and 56% of 25 to 34-year-olds have taken up this option.

That compares with just 14% of people aged 55 and over.

Borrowing was most common in Northern Ireland, where 47% said they had taken out a loan.

That was followed by Greater London (44%) and the north-east (35%).

What can I do instead of taking out a loan?

You may feel like you have no option but to take out a loan because you’re on a low income or have a poor credit score. 

But there are safer alternatives, such as:

• Credit unions - they offer manageable credit and consider applications from people with poor credit scores.
• Employer lending schemes - your employer may be able to offer short-term help e.g. an advance on your wages. Talk to the HR department.

Find out what benefits you’re entitled to

You might also be able to get financial support from the government to help ease the pressure.

Try our benefits calculator to see what help you could be eligible for.

Review your spending

Make sure you know exactly how much money you’ve got coming in and where it’s going.

You can then prioritise your spending and see where you can make savings.

Check out our guide to how to create a budget to get started.

And give our budget planner a try - it’s free and easy to use.

Get help with your debts

If you’re struggling with debt, get in touch for confidential, practical and impartial debt advice.