New research suggests the financial impact of the coronavirus has meant more people using high cost credit.
The Covid-19 pandemic has prompted a rise in demand for high-cost borrowing, according to new research.
With economic uncertainty increasing, a survey of 2,000 UK adults sponsored by Credit Kudos found that nearly three in ten people (28 per cent) have had their income impacted by Covid-19. A quarter (26 per cent) have already had to borrow, taking out £1,719 on average.
More than a half (51 per cent) of people who are currently borrowing have had to turn to high-cost credit, such as payday loans or guarantor loans.
This trend looks likely to continue with more than one in five (21 per cent) expecting they will need to start borrowing or borrow more over the next three months and 86 per cent of those who have already taken out credit expect to continue to do so.
Freddy Kelly, CEO and co-founder of Credit Kudos, said: “The Covid-19 outbreak has resulted in widespread job losses, and even many of those lucky enough to still have a job have seen their income shrink.”
“It’s clear that people need to borrow to help them weather the storm but, with many lenders tightening their rules, it’s driving people to use higher cost options they might never have considered before.”