‘Grey market’ loans hide deeper debt

Research for loans company cahoot shows that 39 per cent of Britons owe money to family or friends, totalling £65 billion.

John Goddard, managing director of cahoot, said that while borrowing from family was common, it had its dangers: “Problems can start when people start to borrow large amounts of money in addition to personal loans, overdrafts and credit cards because this can put a huge strain on monthly budgets and on personal relationships.”

With Britons already estimated to be £1.1 trillion in debt at an average of £4,000 per person, this new study adds another £3,704 to personal debt levels.

However, Mr Goddard told people not to regard loans between acquaintances to be seen as an easy option.

One in ten people told cahoot that they had fallen out with friends because of loans; a quarter had to repay debt with favours; and a tenth said that the original loan necessitated others to borrow money.

Despite Polonius’ warning in Hamlet “neither a lender nor a borrower be”, it seems that many are, leading to arguments and resentment as people struggle to manage debt.