At Danske Bank, Emil Toft Hansen from Copenhagen University is currently writing his business PhD thesis on lending habits of citizens living in Denmark. In connection with this, he has charted payday loan use among around 20,000 Danske Bank customers. His findings show that 40% of all payday loans are taken out by young people between the ages of 18 and 29, and in two out of three cases the young borrower is a man.
According to Louise Aggerstrøm, private economist at Danske Bank, the fact that so many young people are taking out high-interest payday loans is a problem:
“Taking out a payday loan – and in particular taking out several payday loans – can be the beginning of a downward financial spiral. Even if it’s only a matter of modest loans taken out to finance gaming, a new mobile phone, a night out or similar, it’s easy for you to end up paying back a great deal more because the interest rate is high. So a small loan intended to meet an acute need here and now can for many end up being difficult to pay off. And in the worst cases, these young people take out a new payday loan to pay of their existing loan, so the whole thing begins to snowball.”