Brits would rather turn to the bank for a loan than ask friends and family, according to new research.
Asked who they would be most likely to approach first for a ‘substantial loan’ such as more than £10,000, more than six in ten (64%) said they would go to the bank.
Fewer than two in ten (17%) would ask a family member while just 1% would approach a friend, a poll by YouGov Omnibus and Yahoo News UK revealed.
According to the survey of just over 2,000 people, 3% would turn to other financial providers like short-term loan companies, while 13% said they ‘don’t know’ who they would approach.
Young people are far more likely to turn to family for a substantial loan, the poll revealed, while older people would be more likely to go to the bank.
When it comes to 18-24-year-olds, 32% would go to family while 48% would turn to the bank.
In contrast, just 8% of over-55s would ask family to borrow a chunk of money, compared to 75% who would go to the bank.
Listen to the full episode of Britain is a Nation of… below
Discussing the results on Yahoo’s podcast Britain is a Nation of…, money expert Simon Read said mixing family and friends with money can cause all sorts of problems.
He said: “Putting money in that relationship creates all sorts of problems and it’s not just about the money, it can damage or break up families, it can ruin friendships.
“It does happen and it can be a suitable way to go, but I luckily enough have never been forced to do it and would hope to never do it.”
While friends and family may be keen to help, the lack of a formal arrangement can cause issues down the line, he said.
“Friends and family will say, ‘look, pay it back when you can, don’t worry about it’. What actually happens in reality is that six months down the line the people who have lent the money think, ‘well, he’s never said anything about it, when is he going to pay it back? It wasn’t a gift, it was a loan’.
“So I would say to anyone who is thinking of doing this that they do have some kind of formal payback thing.”
That could be anything from setting a time limit on the repayment term, or also discussing interest, he said.