Family fortunes: average loan from relatives totals £2,200
Data from price comparison site MoneySuperMarket suggests that the UK’s total family debt totals billions of pounds, with 55% of Brits resorting to borrowing money from family members.
The figures show that mothers are the most generous lenders, with 42% of all inter-family loans coming from the ‘Bank of Mum’. Meanwhile, dads ranked second – responsible for 32% of loans.
The most commonly cited reason for borrowing money was to buy a new car and to pay for urgent financial matters – both cited respectively by 22% of the sample. Meanwhile, 19% required money for a house deposit.
A little over two fifths of the sample of 2,000 UK adults said they had borrowed money from family to avoid having to pay interest on an outstanding loan.
MoneySuperMarket found those aged 35 to 44 were most likely to borrow money from family, with 61% of this age group turning to family members. The most popular reason was to help pay for a new car. This demographic also borrowed the most, with an average of £2,479.
They were followed closely by those aged 25 to 34, borrowing £2,258 on average to help with a house deposit.
The research also showed that Brits take an average of 11 months to pay back a family member, with 25-34 year olds taking the least amount of time (10 months) and 35-44 year olds taking the longest at 13 months.
Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, noted that borrowing money from a family member isn’t the 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 0% interest period – in some cases, this means you have two years or more to spread out your repayments,” she explained.
“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,” she added.
In her opinion, the most important thing is not to panic and rush to take 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,” she added.