Payday loan shops provide high-interest, short-term loans for people needing money to tide them over for short periods. Links have been established between severe debt and poor mental health, between debt and suicide, and debt and substance misuse. 1  The scientific literature has examined the links between debt and health specifically shows that: 2

  • access to payday lenders is an important factor in borrowing behaviour
  • unmanageable payday lending is linked to poor mental health via indebtedness and financial exclusion
  • payday loans are used to bridge payments on spending that is integral to health and wellbeing (such as food, child essentials, utility bills and emergency needs), however, the high-interest rates may perpetuate the need to borrow more
  • debt is linked to mental health problems and a co-dependence on drugs and alcohol
  • the greater the number of debts a person has, the higher their risk of also having a mental disorder.

Protecting the most vulnerable individuals from entering a downward spiral of severe debt, poor health and poor mental wellbeing should be a priority (see Section 2.7.4). 3

References

  1. Royal Society for Public Health, “Health on the high street,” 2015
  2. Ben Cave Associates and Southwark Council, “Betting, borrowing and health. Health impacts of betting shops and payday loan shops in Southwark,” 2014
  3. Ben Cave Associates and Southwark Council, “Betting, borrowing and health. Health impacts of betting shops and payday loan shops in Southwark,” 2014