A recent survey by Fair4All Finance indicates that individuals are increasingly turning to family and friends for financial assistance rather than utilizing Buy Now Pay Later (BNPL) loans. The survey of over 4,000 adults shows that 26% borrowed money from family and 15% from friends this year, compared to 25% who opted for BNPL loans. Most loans from family and friends involved amounts under £250, with some individuals relying on these sources after being turned down by traditional lending institutions.
Carla McLoughlin, a 42-year-old mother of three, often borrows small sums from her mother, Val Lucus, to manage short-term financial needs. While borrowing has helped them, it has also led to tension in some relationships. The survey found that 9% of individuals who borrowed from family reported weakened relationships, a figure that increased to 17% for those borrowing from friends. Complicating matters, some borrowers from family and friends reported being charged interest, with 16% of those borrowing from friends and 8% from family facing this situation.
The study highlighted that younger adults and households with children are more likely to seek financial help from acquaintances due to previous rejections by banks or other lending options. Overall, a quarter of households could not manage an emergency expense of £500 without resorting to borrowing.
Kate Pender, CEO of Fair4All Finance, emphasized the need for access to safe credit alternatives, stating that individuals should not risk their personal relationships to cover essential costs. The survey also noted that 4% of respondents had approached loan sharks in the past year, raising concerns about the potential for exploitation.
Advice from financial experts includes maintaining written agreements for any borrowed funds and considering safer lending options, such as directing requests for aid to local credit unions.
Source: https://www.bbc.com/news/articles/cze6822y135o?at_medium=RSS&at_campaign=rss