As UK households face tough spending decisions amid record inflation, many Britons are being forced to resort to high-cost lenders after being refused loans by big banks.
A quarter of men (25%) and 13% of women borrowed from a high-cost lender because they had no other choice after being rejected by the general public, according to a survey by loan provider Creditspring .
The analysis suggests that borrowing from high-cost lenders puts borrowers at greater risk of falling into a spiral of debt as they struggle to cope with repayments and late fees.
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This means their credit records are negatively affected and hinder their access to affordable credit options in the future.
More than a quarter (26%) of men who borrowed from high-cost lenders fell into a “debt spiral,” compared to 18% of women.
Neil Kadagathur, co-founder and CEO of Creditspring, said: “Access to affordable credit remains absolutely vital for millions of people across the UK.
“Currently there are up to 15 million people in the UK struggling to access traditional credit options – these are the people most at risk from high cost predatory lenders, particularly in the climate current.
“The lending industry as a whole needs to step up to provide the support that millions of borrowers will need over the next two months.”
A fifth of people in the UK, 21% of men and 22% of women, have asked for additional support to improve their financial situation.
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The Resolution Foundation said the average worker in the UK faces a £1,100 drop in income in 2022/23 as inflation has already hit 6.2%.
Research also shows that men in the UK feel far more optimistic about their finances than women.
Kadagathur said: “Although the UK is battling a cost of living crisis, many men remain surprisingly optimistic about their finances. With the cost of living soaring, purse strings will need to be tightened and men are running a real risk of sinking into unmanageable debt if they are not vigilant.
“Research suggests that men are more open to borrowing but also have fewer options when it comes to applying for credit. It is up to lenders to do much more to support all UK borrowers with affordable credit options during an extremely difficult time when the cost of living is rising day by day.
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