Majority of payday loans taken out to buy food

A new survey has revealed that four out of five people who take out a payday loan do so in order to buy food.

According to christiantoday.com, charity Christians Against Poverty (CAP) surveyed 1,500 of its clients in order to find out how many of them had taken out payday loans at some point.

Over half of those asked (51 per cent) said they had taken out two to five payday loans and 16 per cent said they had taken out so many they had lost count, reports ibtimes.co.uk.

The majority of those who had taken out a payday loan did so in order to buy food, with 78 per cent of respondents citing this reason. Payday loans were also commonly used to pay bills (51 per cent) and to pay the rent or mortgage (36 per cent).

CAP's chief executive, Matt Barlow, said that although the majority of payday loan companies are responsible, better regulations are needed in order to make sure all firms are operating properly and are not lending to those who cannot afford to pay money back.

“We try hard to take a balanced view, being fair to both our clients and the credit industry,” he said. “Therefore we shall be taking this report to individual companies and the Consumer Finance Association with the expectation that they will want to engage with us.”

New rules for payday lenders will be announced this Thursday (3rd of October).