A FINANCE expert has warned about the debt danger of pay-day loans as the North East was found to be one of the regions where they are in most demand.
Steve Ross, the North East chairman of insolvency trade organisation R3, said that while the loans can be an obvious way to get cash, they could push people further into the red.
His warning comes as new research has found the popularity of such loans has fallen by more than a third over the last nine months, while demand among young adults has soared.
Archbishop of Canterbury Justin Welby recently hit out at companies such as Wonga – which sponsors Newcastle United – saying he would like to see such lenders put out of business.
According to a survey of more than 2,000 people carried out by R3, seven per cent of UK adults are planning to take out a pay-day loan in the next six months, down from 11 per cent in October last year.
But 17 per cent of 18 to 34-year-olds said they were likely to take out a loan in the next six months.
The research found the North East had the third highest demand for pay-day loans, with nine per cent of those surveyed in the region saying they were likely to take one out in the next six months, a figure topped only by London, with 15 per cent, and the North West with 10 per cent.
Mr Ross, a partner in the restructuring department of the Sunderland office of accountancy firm RSM Tenon, said: “Negative publicity about the risks of pay-day loans may be starting to affect their popularity, but pay-day and other short-term loans remain a significant financial crutch for younger age groups.
“It is very concerning that the age group with the biggest demand for pay-day loans is also the group where there is the biggest concern about the impact of those loans amongst those that have already taken them out.
“In this context, the demand for pay-day loans among young adults is worryingly high, and it’s a particular concern in an area where their profile is so high for obvious football-related reasons.
“Pay-day loans are not, in reality, the ‘lifestyle’ choice that they are sometimes promoted to be.”