New data from the UK’s leading price comparison site, MoneySuperMarket, reveals the true extent to which Brits rely on immediate family for financial help. The data shows that over half (55 per cent) of Brits have borrowed over £100 from a family member, with the average loan reaching as high as £2,2271, meaning the UK’s total family debt runs into the billions.
The findings show that mothers are the most generous lenders, with 42 per cent of all inter-family loans coming from the Bank of Mum. Dads rank second (32 per cent), with brothers (six per cent) coming in third place. While family loans are a one-off event for most people (62 per cent), six per cent rely heavily on their relatives and borrow from them at least once a month.
When looking at the reasons why people borrow from family, over a fifth (22 per cent) of Brits cite buying a new car as the primary reason. A further 22 per cent borrow from a relative to sort urgent financial matters, 19 per cent for a house deposit, and 15 per cent used the cash to pay off a bill that was higher than they anticipated.
When asked why they chose to borrow from their family instead of the bank, almost half (45 per cent) say a relative offered them the money to avoid running up debts with a bank, while 41 per cent stated it was so they wouldn’t have to pay interest on an outstanding loan.
Those aged 35-44 are the most likely to borrow from a family member (61 per cent), with the most popular reason being to help pay for a new car. This particular demographic is also the age group that borrows the most, at £2,479 on average. Over 55s are the least likely to have relied on a relative for cash, with 43 per cent having previously borrowed over £100, while those aged 45-54 borrow the least on average (£1,952).
On average, Brits take 11 months to pay back a family member, with the younger age group (25-34 year olds) taking the least amount of time (10 months) and 35-44 year olds the longest (13 months).
Percentage that have borrowed money from a family member
Average amount borrowed from a family member
Most popular reason for borrowing money from a family member
To help pay for a deposit on a house
To pay for a new car
To pay for a new car
To help pay off an unexpectedly high bill
Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, commented: “It’s not hugely surprising that people are turning to those closest to them for help – whether it’s with paying for their first home or paying off an unexpectedly high bill.
“Borrowing money from a family member is an option – but it doesn’t have to be your only option. There are plenty of ways to borrow responsibly and pay off what you owe at a manageable rate, such as a credit card with a zero per cent interest period – in some cases, this means you have two years or more to spread out your repayments.
“Certain current accounts also offer an interest or fee-free overdraft, which could be another option for the fifth of Brits that need money urgently. The main thing is not to panic and rush into taking out credit with a high interest rate. Consider your options carefully and if you do need to borrow money, having a plan in place will help ensure you stay on top of your repayments.”
Visit MoneySuperMarket to discover your options for borrowing responsibly.