The areas surrounding North Lanarkshire have recently been named the ‘payday’ capital of the country, with the region the most concentrated for taking out high cost payday loans, a recent report revealed.
According to the report, £23.87 was borrowed for every resident in the Motherwell postcode area in 2018, followed by Stirling at £21.53 per head and Glasgow at £19.97.
Whilst over 3 million people in the UK turn to payday loans every year, the proportion of those applying from North Lanarkshire was highest on the list, which includes other towns of Airdrie, Coatbridge, Hamilton and Wishaw.
A figure of nearly 37,000 high-cost, short-term loans were taken out in Motherwell and £9.1million borrowed. Although worrying, it is very small in the entire scheme of overall payday loans taken out in the last 12 months – with a total of 1 million loans funded equal to £1.2 billion.
Despite heavy regulation introduced by the Financial Conduct Authority in 2015, it has not slowed down the demand for the high cost products which often demand interest rates of more than 1,000% APR. A price cap of 0.8% per day was introduced in January 2015 and a much stricter on boarding process for lenders and brokers to operate in the industry.
Politicians blamed the borrowing on benefit cuts, low wages and zero-hours contracts.
Marion Fellows, SNP MP for Motherwell and Wishaw MP, said: “The roll-out of Universal Credit, which cuts incomes, rigged disability assessments, a minimum wage below the real living wage, precarious work through zero-hours contracts, and the two-child tax credit cap are all policies which are forcing people to turn to payday loans.”
North Lanarkshire Council, meanwhile, suggested alternatives to payday loans, saying: “We would recommend using credit unions rather than payday lenders or other short-term, high interest loans.”
But some Motherwell residents said payday loans are a lifeline.
Teresa McConnell, 49, of Motherwell, said: “I’ve used payday loans in the past and would use them again, I think they are pretty handy.
“I’ve got money from them when it’s been the run-up to Christmas, and other events, and usually borrow about £100 a time.
“I’ve always managed to pay the money back so haven’t got into any problems.”
Other parts of the UK where payday loans were popular included Birmingham, Manchester and Sheffield, some which included affluent and middle class areas, most likely due to the increased living costs, according to My Financial Broker.
In terms of population density, Croydon in South London that topped the list for being the most reliant on payday lending where the average person had borrowed £29.15. Of course, not every resident of Croydon is taking out payday loans, but in some cases there were individuals taking out 3 or 4 loans per year.