Prudent borrowers in the West Midlands are shunning high-cost credit and are more likely to ask for a loan from the bank or their family, according to a survey.
Some 37 per cent of people interviewed said the bank would be the first port of call, followed by parents, grandparents and other family at 20 per cent, according to research by insolvency trade body R3.
Just over one in ten in the West Midlands said they had savings and did not need to borrow, while a further 14 per cent said they had never borrowed money and never would.
On average, across the whole of the Midlands, East and West, only five per cent would make a credit card the first choice for borrowing and only one per cent would choose a payday loan over other borrowing options.
R3 Midlands chairman Matthew Hammond, a partner at PwC, said: “It is encouraging to see that people are starting to source more sensible forms of credit and are avoiding options with cripplingly high interest rates.
“With unemployment levels rising, any amount of debt could have a serious impact on personal finances.”
The survey also highlighted that people in the West Midlands only begin to worry when their debt levels exceed around £2,400, excluding mortgages and student loans.
This is slightly lower than the national figure for the UK which is around £3,000.
Mr Hammond added: “The fact that young people are more likely to borrow from their parents than the bank might represent sensible thinking but could result in additional strain on their families.
“They are getting what is most likely to be interest free credit, but according to a previous R3 survey, 48 per cent of 45-55 year olds are worried about their current level of debt and this may well be as a result of supporting their grown up children.
“Only two per cent of 18-24 year olds have savings so don’t need to borrow money, compared to nearly half in the earlier R3 survey who are worried about their level of debt.
“Clearly there needs to be better financial education for young people to avoid them getting into serious financial trouble later in life.”
