20-somethings call on parents for loans

Wednesday, 17 September 2008 10:01

The UK's 20-somethings fresh out of university and bitten by the credit crunch are increasingly turning to the bank of mum and dad to gain access to loans.

A poll of 1,000 people by moneysupermarket.com shows 23 per cent of Brits in their 20s have used parents as guarantors when applying for a loan.

Meanwhile research by Scottish Widows earlier this year revealed 55 per cent of parents have given or loaned their children or grandchildren cash.

Parents who are handing out cash have already parted with £14,525 and expect to give out another £11,000.

Tim Moss, head of loans at moneysupermarket.com, said: "Not only can your offspring eat you out of house and home, but they're increasingly leaning on parents financially too.

"It has been common for mum and dad to be tapped for some financial help towards a first home, but more and more parents are being asked to act as guarantors on a range of credit applications, including loans and mortgages."

Mr Moss explained the credit crunch, tightening lending criteria across the board means it is becoming difficult to even get a credit card or a loan.

"Younger people are especially vulnerable in this climate - they tend not to own a home and are more likely to have missed the odd payment on a mobile phone or credit card," he said.

"While this may not seem like a big deal at the time, it can have a dramatic impact on your credit record. In today's stormy financial climate, the more credit-worthy you are, the better your chances of being accepted for the best deal."

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