The government’s ‘Eat Out to Help Out’ scheme, where customers could get a 50% discount to eat at restaurants that registered with the government scheme saw a spike in payday loan applications.
The government’s scheme started on the 3 to 31 August 2020, which saw the scheme being active every Monday, Tuesday and Wednesday.
Restaurant owners and other business owners in the hospitality industry praised the initiative at the time and said it helped boost business.
But what about consumers? Cashfloat, a London-based payday lender that specialises in loans for bad credit, published a report last week titled ‘Who Borrowed Payday Loans During the Coronavirus Pandemic’, which analysed payday loan applications received during the first year of the pandemic.
Compared to the day before, it found that payday loan applications spiked 41% on the first day of the ‘Eat Out to Help Out’ scheme. This could suggest that people wanted to borrow money to take advantage of the scheme, where they otherwise wouldn’t have.
Sarah Connelly, an analyst and writer for Cashfloat said, “For people who couldn’t otherwise afford the luxury of dining out, a 50% discount is too good an offer to pass up.
“Yes, the scheme helped business owners out, but what about the people that wanted to borrow expensive loans so they could afford a 50% discount? Payday loans are really expensive, and shouldn’t be used for something like eating out in a restaurant.
“That’s why Cashfloat asks for the ‘Loan purpose’ in our application form, and we only approve a loan request if the answer meets our lending criteria.”
Leave a Comment