Forget everything you think you know about payday loans. Forget about the crisp packet and tumbleweed-strewn, boarded-up high streets of credit crunch blighted Britain, forget about desperate souls searching helplessly for loans they can’t afford. In fact, abandon all of the media-prescribed stereotypes and preconceptions you have about short term loans altogether because, according to a recent study, the UK payday loan hotspot, where a high proportion of inhabitants regularly search for short term finance from the likes of Wonga online, is none other than middle class, well-heeled Altrincham.
Welcome to Altrincham
A well-to-do suburb of Greater Manchester, Altrincham is not the payday loan hotspot you may have imagined. While it’s not exactly Belgravia, this nice, middle class suburb is a former market town and now the commuter town of choice for professionals working in central Manchester.
With a long history of middle income, white collar residents (Altrincham’s population has been more middle class than the UK average ever since 1931), a well educated demographic (only 21% aged 16-71 had no educational qualifications in 2001) and a very ethnically homogeneous society (just 4.6% of inhabitants were non white according to the 2001 census), this is a town which bucks the clichéd view of payday loan hotspots.
The payday loan town
And yet, this town makes more online searches for short term finance than any other in the UK. According to statistics released by search engine giant Google in July 2014, Altrincham residents make the most online searches for phrases including “Wonga.com” and “payday loans” in the whole of the UK.
Keeping up with the Joneses
Yet economists who are familiar with the area are not surprised by Altrincham’s new claim to fame. Despite wide-spread public perceptions that it is those with desperate financial needs and nothing in the kitty who attempt to get hold of short term finance, the middle classes are often the biggest customers for payday lenders. With the assets and education to afford and understand the product, it is the middle classes who are most likely to receive approval for payday loans, especially with regulations tightening up on who can and cannot receive approval for this kind of finance.
Meanwhile, a need to “keep up with the Joneses” spurs on demand for accessible, short term finance amongst the middle classes. With high-cost commitments and expenses such as private schooling for children and exotic holidays, many middle class citizens have, on occasion, found it difficult to find extra cash for emergency expenses during the leaner years of the credit crunch. While money always becomes available again when payday comes around, if a pressing expense needs to be paid for, it’s common to find that middle class monthly budgets are tied up elsewhere.
While it may make sense to simply enjoy a staycation instead of a fortnight in Florida for a few years until the economy stabilises, the social capital tied up in enjoying all that being middle class entails is often too difficult to let go of, making payday loans a very helpful source of emergency finance when unexpected expenses crop up at the end of the month.
Payday loans reimagined
The latest Google results certainly make interesting reading and turn the widespread idea of what payday lending is all about on its head. With the well-educated, white collar middle classes finding a helpful application for short term lending – and using it responsibly – it’s clear that this is a financial product which has its place in the UK’s canon of financial products.
This news comes in the context of rigorous regulation of the short term lending industry. With a fresh batch of regulations implemented by FCA (who took the regulatory reigns from the OFT in April 2014), it looks like leading lenders like Wonga, with the help of their new regulatory body, are starting to get to grips with their comparatively young service.
Have you made use of payday loans before? How would you describe your use? Do you think Altrincham’s middle class payday loan habit is a positive sign? What payday loan stereotypes immediately spring to mind? Share your experiences and opinions below.