Recent research found UK adults are comfortable in asking a loved one for an average of £1,500 at any one time.
And borrowers have been loaned a total of £3,400 from their nearest and dearest in the last five years – to fund big life milestones such as weddings and also to cover everyday purchases like buying a coffee or lunch. But although it’s become part of everyday life, 30 per cent found it an awkward experience, and nearly half (45 per cent) ended up regretting it.
The research, commissioned by Shawbrook Bank Personal Loans, also found a third of women (33 per cent) typically feel uncomfortable asking to borrow money, compared to a quarter (24 per cent) of men. And 77 per cent even choose to avoid the topic entirely unless in the case of an emergency.
Sally Conway, head of consumer Communications at Shawbrook Bank:
“We’re a nation of borrowers and for many this could mean borrowing from loved ones to help fund our big life moments, as well as the little things we need. But, borrowing money is not a decision to be taken lightly and even if it’s from friends or family, you need to have clear terms agreed from the outset or things could get tricky.
“Talking it through and having things in writing – including how much is borrowed, repayments and timelines can help to avoid any unnecessary awkwardness later down the line. This is a necessity when borrowing from a bank, and the same principles should be applied to any form of borrowing.”
The research also found more than half of adults have previously turned to a financial lender rather than seeking help from family and friends. This is due to the lack of awkwardness (45 per cent), not compromising a relationship (45 per cent) and it being an ‘official route’ (37 per cent).
The average adult has borrowed an estimated £8,000 in unsecured credit in the last five years. And the typical adult would be comfortable seeking a sum of £11,000 from their bank in the future. Covering the cost of a car was the top reason to consider applying for a loan while more than a third (34 per cent) would finance home improvements with help from a lender. But the survey, conducted via OnePoll, found many don’t do their homework when it comes to borrowing as only 29 per cent would spend time researching before making a decision.
Just under half (44 per cent) would take the time to understand the APR while only 41 per cent would work out a budget before committing to the loan.
Sally Conway:
“Our research has found that alarmingly even when borrowing from financial institutions, not everyone is crystal clear on what they are signing up for. Financial lenders will always carry out certain checks on affordability when you borrow money and will set terms and conditions before lending money – it’s really important to review these in detail and make sure you understand them.
“At Shawbrook, we want to help our customers better understand the ins and outs of borrowing. Knowledge is power and its important consumers know what they’re signing up to right from the start, which is why we offer a range of guides and tools to help people navigate the world of borrowing better. We believe in being transparent and fair with everyone. It’s really important no matter what you’re borrowing for or from who, to be clued up and do your research before you enter into any agreement so that you can make an informed decision on what’s right for you.”
