Petrol prices: Rising costs forcing motorists to borrow from payday loans to keep on road

6 Sep 2013

Soaring petrol prices are driving hard-up motorists into the clutches of extortionate payday loan companies, the AA warns today.

It found one in six car owners, hammered by four petrol price spikes in the last 18 months, are going into the red.

According to the study, a sixth are forced to take out payday loans, pawn prized possessions, go overdrawn or dig into savings to top up the tank.

With pump prices hitting an 11 month high of 140.3 a litre in March and still at 138p a litre today, drivers are having to stump up an extra £5 for a small tank of fuel.

A fifth admitted their household budgets are at breaking point because of petrol prices, rising to third of those in low paid, unskilled jobs.
Young drivers aged 18-24 are the most likely to fall into a payday loan spiral of debt and one 19-year-old told a Yahoo! internet forum how he owes money to several lenders because of his petrol bills.

The teenager said: “I’ve dropped out of uni and managed to find a job however I was using over £500 petrol a month in my new job.

“I had no money to put fuel in my car at the start of my first month and ended up taking out a pay day loan with 2/3 lenders. It’s really spiraled out of control and I’m just so depressed and anxious all the time.”

AA president Edmund King said: “Young drivers with little capital to fall back on and who are likely to be on lower pay scales are clearly suffering the most – one in 50 of them have put themselves in real financial danger by taking out a payday loan. But, they are not alone.”

For the survey also found one in 50 in the 35-44 age group are also turning to crippling, high-interest lenders to make ends meet.

“These drivers are probably saddled with family costs and mortgages or high rents, and their predicament is even more disturbing,” said Mr King.
“Fuel price desperation has created a new and sinister twist to the phrase ‘driven into debt’.”