The Royal Society for Public Health (RSPH) have discovered that payday loans are the “unhealthiest” form of borrowing; which, for anyone who has had the misfortune of dealing with a payday loan company, will be of no surprise.
In a survey that questioned 500 people, RSPH determined that payday loans have the worst effect on mental health, followed closely by unauthorised overdrafts and then doorstep loans.
RSPH’s report found that almost 50% of people who rely on credit drink more alcohol because of it. For borrowers who used payday loans, this figure was 12% higher, rising to over three in five people.
One of the saddest figures in the report was that 65% of people spend more time alone because of the distressing and depressing nature of their debt-ridden financial situation. However, this figure rises to a terrifying 83% for people who have borrowed from a payday loan company in the last two years. Four in five people who received a payday loan within the same period reported that it was having a negative effect on their family life too.
From our experiences in this line if work, unfortunately, none of these figures are surprising at all. We deal with thousands of people every year who tell our staff about the real mental trauma that their situation causes them. So many of our clients reach out to us because they cannot handle being scared every time the phone rings or nervous every time they are opening an envelope.
Traditionally fun events like birthdays and the festive period are no longer a cause for celebration for a lot of people; they are just constant reminders of difficult financial circumstances. Our work with SAMH has revealed even more about the drastic effect that debt can have on your health and vice versa.
The Problem with the Payday Industry
The fact payday loans are such a clear offender regarding public health should not be surprising, even for people with only a loose understanding of how the industry works. However, this RSPH report is hopefully another nail in the coffin for these parasitic companies. Payday loan legislation was overhauled in the last few years, yet it would appear that it has still not gone far enough.
The law that limits the interest on payday loans so that you cannot pay back over double what you originally borrowed is clearly ‘good’. However, if you are in a situation where you require a quick turnaround high-interest loan, this can still be an insurmountable amount to repay; not to mention any other fees and charges that could be added after missed payments.
RSPH has suggested four kinds of legislation that the government should pursue:
- Ban “targeted marketing” of the lending service to people most at risk of failing to keep on top of the loan repayments.
- Make “health warnings” attached to these loans which warn of the health implications compulsory.
- Introduce mandatory health assessments to be undertaken by all payday loan company staff before they can approve a loan.
- The companies must also have clearer “signposts” in place which can direct at risk clients to mental health and debt management services.
These last two suggestions have been implemented successfully within our company, in no small part due to our ongoing relationship with SAMH, and we can see the invaluable effect these policies have had on our clients. We agree that these vicious payday loan companies, who are a significant cause of the problems which we spend every day fixing, should adopt the same policies.
One last important thing that we should take away from this fantastic report is that credit unions came across very well. If you need to borrow money and can get a hold of one of these fantastic non-profit enterprises, then the evidence suggests that this is the ‘healthiest’ form of borrowing.
There comes a time where all of us have to borrow some money; there is no getting away from the fact that it is often essential to getting on in life. Borrowing can help us to provide for our children, or keep our home in a suitable condition, or even maintain and run a car. Having said that, this should not come at the expense of your mental health, and you should always do proper research before borrowing. We would even suggest seeking professional guidance before making any significant decisions.
Where to Get Help
Unmanageable debt and poor mental health come together in a toxic and harmful relationship. Debt can severely affect your mental health, while poor mental health can make it even more difficult to manage your finances appropriately. If you are in a stressful and challenging situation, there are many places that you can reach out to for help.
Call SAMH on 0141 530 1000 to chat to some amazing and committed individuals who can offer some clarity and guidance on your situation.
If you are facing a particularly bad spell of anxiety or depression, then Breathing Space on 0800 83 85 87 can provide some invaluable relief.
Finally, if a difficult financial situation is a constant source of stress and anxiety and you find that debt follows you about wherever you go, then it is time to get professional intervention. Call debt free life on 0800 808 5124 and let us put a stop to creditor harassment.