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Young South Africans flock to payday loans

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Cape Town - Debt counsellors are seeing a sharp increase in the use of payday loans among South Africans in the 25-39 age group.

Personal loans make up the biggest portion of the debt type for all ages, except the over-65s, according to statistics from Debt Rescue. The over-65s have more credit card debt than personal loans. In total, Debt Rescue clients owe 39% on personal loans, 23% on store cards, 22% on credit cards, 8% on vehicle finance, 6% on overdrafts and 2% on home loans.

Personal loans can include loans from banks or from legal lenders, and can include so-called payday loans. Debt counsellors deal with clients who owe money to legal lenders, so statistics of loans from loan sharks or illegal payday loan operators are not available. No doubt, they would make for terrifying reading.

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