More people in UK using family help than Buy Now Pay Later loans

A new survey reveals that more people in the UK are borrowing from family and friends than using Buy Now Pay Later loans, highlighting a shift in how individuals manage financial shortfalls amid economic pressures. The research, commissioned by non-profit Fair4All Finance and conducted by Ipsos, surveyed over 4,000 adults across England, Scotland, and Wales, finding that 26% had borrowed from family and 15% from friends in the past year, compared to 25% who used BNPL services. This trend underscores the growing reliance on personal networks for credit, particularly among those excluded from traditional financial systems. Many respondents reported turning to family and friends after being rejected by banks or BNPL providers, often seeking a cheaper alternative to high-interest short-term loans or overdraft fees. For instance, Carla McLoughlin, a 42-year-old mother, regularly borrows small sums from her mother Val to cover expenses between paychecks, illustrating how such arrangements can provide crucial support during tight financial periods. However, the survey also noted potential downsides, with 9% of family borrowers and 17% of friend borrowers reporting that borrowing strained their relationships, often due to differing expectations around repayment. Demographically, younger adults, households with children, and individuals in insecure employment were most likely to rely on informal borrowing, with a quarter of all households stating they could not afford a £500 emergency without borrowing. Beyond family help, 4% of respondents had turned to loan sharks in the past year, and experts warn that some may unknowingly borrow from unregistered lenders posing as friends, leading to spiraling debts and intimidation. Kate Pender, CEO of Fair4All Finance, emphasized the urgent need for safe, affordable credit options to prevent people from risking personal relationships, advocating for expanded access to financial products for underserved communities. As cost-of-living pressures persist, this trend may continue, calling for action from policymakers and financial institutions to address credit accessibility gaps and reduce reliance on high-risk borrowing methods.