Payday loans issued exceeds borrowers income in Northern Ireland

Data provided by StepChange shows that not only are households in Northern Ireland struggling more than other families in the UK, but they have higher overall debt levels and are borrowing more from high priced payday lenders than others. In fact, any person that has taken out a loan from one of these lenders owes £1,689 in total debt, which is higher than their average household income of £1,440.

The excessive payday loans are not the only problem though. Those in debt arrears in Northern Ireland owe on average over £18,000 in all of their borrowings, which is 20% more than other people across the UK. So consumers are turning to banks, loan sharks, and other companies to borrow money just to pay their bills on a monthly basis. They are in effect falling into the spiral of a maybe never ending debt trap.

This is a major concern for the Northern Ireland area. It will be impossible for any person to address this problem as their income is not high enough to pay down these payday loans or other debts, and many are facing evictions or homelessness as a result of this. Studies also show that these families are turning to charities, such as Trussell Trust food banks, to meet their basic needs and feed their families.

The economy in the UK continue to be challenging for most people, especially the low income and those on benefits. However the financial landscape in Northern Ireland is even more challenging. There continues to be a high level of redundancies as well as wage freezes and government cut backs in welfare. With access to mainstream credit still limited, in particular in Belfast and other areas of Northern Ireland, many are turning to high priced borrowing.

Actions being taken by the government and not-for-profits

While the number of people turning to StepChange continue to increase, for many it is too late. Almost 25 percent of their clients have already turned to a high priced payday lender before seeking help from the not-for-profit. What individuals should be doing is requesting counselling much earlier, as soon as they think they may start to struggle. That is the best time to address any problems that are being faced.

MPs in Northern Ireland are also using this data as an example of how payday lenders are not regulated enough and are taken advantage of borrowers, many of them who are elderly or are living in poverty. These figures show that many lenders are not carrying out adequate reviews and assessments of affordability checks before approving funds for the borrower.

All of those economic factors are leading people to turn to payday loans and other lenders for funds, but this is often the wrong thing to do. Instead they should call upon not-for-profits such as Step Change (phone 0800 138 1111) and other charity organisations for free budgeting advice and other support.