The findings were revealed in a new, national survey of borrowing and debt trends among 1,000 adults in Ireland. The survey was commissioned by the Irish League of Credit Unions and carried out by i-Reach Insights in December 2018.
The findings revealed that one in four adults plan on borrowing money to fund a major expense in 2019. More than a third of these borrowers will take out a car loan. Just over a quarter (26%) will take on a home loan while 16% will borrow to go on holiday or travel. 9% will borrow to fund third level education and 5% will borrow for their wedding.
The vast majority of borrowers (74%) plan on getting their loan from the credit union. Banks came in second as the lender of choice at 17%. Family or friends are the go-to lenders for 5% of borrowers, while 1% said they would borrow from a moneylender. Borrowers will take out an average loan of €8,558. The majority (42%) plan on paying the money back over 3 to 5 years.
The affordability of monthly loan repayments stands out as the deciding factor in people’s choice of lender (36%), which may point to a lack of awareness of the true cost of the loan. Less than a quarter (23%) said the APR rate was the most important factor for them. 15% said confidence in knowing their loan would be approved would dictate who they would borrow from. 11% cited the ease and convenience of the loan application process.
Half of adults surveyed however, say they are reluctant to borrow from a financial institution this year. 45% say this is because they are prioritising saving money over borrowing, and always do so regardless of the economic climate. A further 16% say they are prioritising saving because of their experience during the recession.
When asked about their relationship with borrowing money to date, most people (23%) said they had only ever borrowed for a mortgage. 21% said they had both a mortgage in addition to other good-size loans. 15% said while they didn’t have a mortgage, they had other good-size loans, such as car or education loans.
13% said they borrowed several times per year to fund expenses such as holidays, Christmas and back-to-school expenses. A lucky 22% said they had never borrowed, and funded everything through their income and savings.
More than a third of adults will carry debt from a previous loan into 2019. Nearly half of these adults (48%) will have this debt in addition to a mortgage.
Eight in ten will carry the debt from a personal loan. 11% are in debt from a third level or education loan, while 5% are carrying a business loan debt.
Over a third of all adults responding to the survey (36%) said they would turn to family members or partners for advice if they found themselves in unmanageable debt in 2019. This was followed by 28% who said they would turn to the Money Advice and Budgeting Service (MABS). 19% would go to their local credit union for assistance, while just 8% would go to their bank.