Over one in ten (12%) of 18-34 year olds believe they will be more likely to take out a payday loan once the cap is introduced, and 9% of them believe they would take one out anyway irrespective of the cap.
While the nation is broadly in support of the cap, it won’t go far enough to curb the bad practices of payday lenders.
James Benamor, founder and CEO of Amigo Loans, said: “The government’s cap reeks of gesture politics and while it might go some way to eliminate the crooks in the market, it won’t solve the bigger issues plaguing the industry which is clear guidance on affordability.
“Borrowing money can be a good thing and at cheaper rates an even better thing but it's all academic if people can't afford the repayments. The cap could be 0% and payday lenders will still be giving loans to people who shouldn't be borrowing. The regulator needs to act urgently and offer clear guidance on affordability, and harsh enforcement against the worst offenders.”
Over three quarters of Brits (82%) think payday loan companies make it far too easy for people to take out a loan, while 86% believe payday lenders should be doing much more to ensure borrowers actually understand interest rates before agreeing to lend them money.
Research found almost three quarters (74%) believe computer calculations, used by the likes of Wonga, don’t allow for sufficient checks to be made to ensure the information provided by the customer is correct prior to lending.
Over three quarters (81%) think loan companies should speak to customers instead to ensure loans are only given to those who can afford to repay.
What’s more, it’s not just young people who will be encouraged to take out a payday loan in light of the cap – the regions are also divided.
A sixth of Londoners (17%) are more likely to turn to a payday loan following the cap, along with one in ten (11%) people in the North East.
Just 59% of people in the North East strongly support the cap compared to 74% of people in the South East, highlighting the great debt divide.