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£1.6bn lent to family members in past year

22nd July 2014 Print

A third (33%) of people in the UK have lent money totalling £1.6 billion to relatives in need of financial assistance in the last year, new research has found.
 
The survey, conducted on behalf of debt advice and solutions provider Debt Advisory Centre, reveals that the equivalent of 16.4 million UK adults have given a loan to one or more members of their family in the last 12 months.
 
The average sum lent to relatives during this period was £91 to £100, which equates to a total of £1.6 billion lent nationwide. And a generous one in 10 people who have given loans to their family revealed that they had lent more than £200. However, not all of these lenders expect to get their money back again.
 
Of the family lenders who took part in the survey, two-fifths (41%) admitted they didn’t expect to be repaid. This comprised nearly one in five (19%) who said they simply did not expect a repayment, while a further 22% said that although they expected the loan to be reimbursed they were not sure it would be.
 
Overall, two-fifths (41%) of respondents admitted that the amount of money they lent someone would determine their attitude to pursuing it. However, a quarter (26%) revealed that when they do give someone a loan, they never pursue it. One in eight (16%), meanwhile, said they drop hints to the borrower rather than asking directly for the money to be repaid, and nearly the same number (17%) make sure they agree a repayment date when they hand over the loan and start chasing anything that has not been repaid as soon as they can.
 
Surprisingly, younger people are the most likely to lend to members of the family. More than half of 18 to 24-year-olds (56%) said they have given a loan to a relative in the last year, compared to 23% of 45 to 55-year-olds.
 
Ian Williams, spokesman for Debt Advisory Centre, says: “Putting your hand in your pocket to help out a family member is very common across the UK. What is less common is actually seeing the loan repaid – and many people find it very hard to raise the subject of an unpaid loan with a family member. To avoid the possibility of misunderstandings and bad feeling it makes sense for both the lender and the borrower to agree a firm arrangement up front on exactly what will be repaid and when.”