A surprising number of payday loan customers have well-paid, professional jobs, it appears.
Figures released by one prominent short-term online lender, FridayFriday, have revealed that a surprising number of loan applications come from people with good salaries and seemingly secure jobs.
The evidence flies in the face of the perceived wisdom about payday loans - that they are the domain of part time, jobless or low-paid workers who need the money to keep them solvent until their pay packets arrive.
During a twelve month period analysed by the company, FridayFriday.com found that so-called ‘white collar workers’ made up half of applications for loans between £100 ($160) and £1,000 ($1,600). And of that figure, a surprising 28 per cent were managers and 26 per cent were in sales and marketing jobs.
FridayFriday.com founder Jason Gardiner said the figures underlined that payday loans are becoming an increasingly popular way for people in all socio-economic groups to get their hands on cash when they are in a tight corner.
"Seven per cent of applicants are in high-end professions such as law, accountancy and medicine and this just goes to show that, regardless of your income, there can be times when people need a short-term loan to see them through until their next pay day,” said Gardiner.
"People we've spoken to in these professions have stated that typically they've applied for a short-term loan due to an unforeseen cost increase, something which can happen to anyone regardless of the size of their salary. Half of all applicants are from white collar backgrounds, including managers, salesmen and marketers, which reinforces just how widespread payday loaning is becoming."
Payday loans are undoubtedly booming. Recent figures showed that the UK market increased from 300,000 borrowers in 2006 to an impressive 1.9 million in 2010.
Of course, there are those who accuse payday loans companies of preying on those in financial trouble. Such is the concern that the UK’s Office of Fair Trading (OFT) is investigating whether some firms target people who are unsuitable for credit. They are also looking into accusations that firms are rolling over loans so that the charges escalate and they become unaffordable.
On the other side of the argument, payday loan companies say that they are providing a valuable service to those who can’t get access to High Street banks.