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160,000 Scots caught in vicious cycle of ‘roll-over’ debts

Citizens Advice Scotland have said a major factor in the growth of personal debt in Scotland is cases of people taking out one loan to pay off another. CAS also says many lenders encourage this – despite pledges not to do so. 

Figures published today by the Debt Advisory Centre Scotland (DACS) show that nearly 160,000 Scots borrowed money to make a loan repayment in July. DACS also found that Scots aged 25-34 were the most likely to do this, with men more likely than women. The full DACS press release is re-produced below.

Responding, Citizens Advice Scotland’s Chief Executive Margaret Lynch says, 

“Sadly, ‘roll-over’ loans are a common problem in the debt cases we see in the CAB service. The pattern is very familiar. You are short of money one month, so you take out a quick payday loan, but the interest rates are so high you soon find can’t repay it, so you have to take out another loan to pay it off, and then another one to repay that one. Soon you have three or four or more loans on the go, all of them paying off each other, and all of them building up late fees and high interest. 

“It’s a vicious cycle, and people quickly lose control. This is what we mean when we talk about people ‘drowning in debt’, and sadly it is very common in the cases we see at the CAB service. We’re not surprised either by the finding that it is mainly young people who get into this position, because this fits with our advisers’ experience. 

“One of the worst aspects of this is that some lenders deliberately target vulnerable people with roll-over loans. This is where, for example, a customer contacts the company to say they can’t make a payment, and the company responds by offering them another loan. Lenders are not supposed to do this, but we see evidence that many still do. This is the sort of thing that we need to stamp out. 

“If you are in debt, the answer is not to take out more loans. What you should so instead is get help. The CAB service offers free, confidential and impartial advice, and our expert debt advisers will help you get control of your debts, no matter how bad they seem. Contact your local CAB office or call our consumer advice line on 08454 040 506.”


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