Britons owe friends and family an estimated £26 billion, according to a new survey by online payment provider PayPal. The survey found that this figure has been lent out by UK consumers who have helped loved ones out of financial crises over the past 12 months.
Family members are the hardest hit, with an estimated £14 billion having been borrowed from them in the past year. Meanwhile, around £6 million has been lent to hard-up best friends, according to the survey. Around 29 million people said that their friends or family had borrowed money from them in the past year, with each person being owed around £898 each.
Mums are the first port-of-call when people hit a financial crisis, the study showed, with 16 per cent of people first asking their mother to lend them money. Just nine per cent of people owe money to their fathers, according to the report.
But while the loans may be given out of love, borrowing could lead to family fall-outs. The survey revealed that around 9.6 million people in the UK have had arguments with friends and relatives over money. Many fail to get their money back once they have lent it out. The poll showed that 56 per cent of the population who have lent relatives or friends money over the past year always make sure they get the full amount back.
But some find it difficult to get their loved ones to pay up, with the debtor often coming up with excuses as to why they cannot pay back the money yet. Excuses include: "I'll give you cash when I see you" or "I don't have my chequebook with me".
Around three million people say that these rifts caused by lending and borrowing have still not been resolved. To avoid this problem, friends and family should make an agreement on when the money can be paid back in order to avoid heartache and money problems later on. Alternatively, consumers in financial difficulty could take out a bank loan.
While they might up paying a higher rate of interest, the cost of taking out a bank loan could be limited by shopping around to ensure that the best possible deal is secured. What's more, the risk of falling out with family members is reduced, and the relationship between lender and borrower will be strictly professional rather than steeped in intrigue.
In short, friends and family would be there to provide emotional support in times of financial strife, but the bank manager will be able to concentrate fully on helping out monetarily.
Disclaimer:
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.Adam Singleton
