Neither a borrower nor a lender be
Published 22 April 2013 by Matthew Plant
For Shakespeare Day, we wanted to find out if lending to friends really does put the friendship at risk. We found that almost 3,000,000 relationships have been damaged in the last 12 months alone.
Everyone knows Shakespeare's famous line about borrowing and lending, but do you know what comes next? He was really talking about loans between friends:
Neither a borrower nor a lender be; For loan oft loses both itself and friend.
Hamlet, Act I, Scene III
To mark Shakespeare Day, April 23rd, we did some digging* to find out how many people are lending to family and friends, and what happens when they do. Most important: how many people lose friends as well as money this way?
So we asked over 2,000 people whether they'd lent to any friends or family members in the last 12 months, whether they'd borrowed any - and what happened next.
Borrowers and lenders: two different sides of the same coin
When we looked at the figures, one thing really stood out. When it comes to loans between friends, borrowers and lenders can have very different ideas about how it all works out…
Lenders and borrowers who said loans were not usually repaid
- 8% of the 'lenders' we asked said loans usually weren't repaid
- Just 2% of the 'borrowers' said that
So borrowers seem to think it's more likely to work out well. It could be because we're more likely to remember when someone's let us down - but we're all pretty good at forgetting the things we'd rather forget…
3,000,000 damaged friendships
- 15% of lenders say lending money to someone has damaged their relationship.
- Just 7% of borrowers said that borrowing had put a strain on their friendship
So lenders are over twice as likely to feel the money's come between them.
It seems a lot of people feel hurt or even resentful when a loan's not repaid - but keep it to themselves. They might not bring it up, but the damage is there all the same.
And since almost 19 million people have lent money in the last year, that's a lot of damaged friendships: almost 3 million across the UK.
Are there really more lenders than borrowers?
Lenders outnumber borrowers nearly 2:1
When we asked about loans between friends…
- 37% of our respondents said they'd lent some money out in the last year
- Just 19% said they'd borrowed some
Again, are we all guilty of glossing over the bits of our history we're not too proud of? Or is it just because people who borrow money tend to borrow from more than one person?
Expectations vs. reality
Borrowers: repayment expectations vs. reality
Lenders: repayment expectations vs. reality
When they're talking about a loan:
- 91% of borrowers usually think they'll repay the loan, while
- 80% of lenders usually think it'll be repaid
It says a lot about the lenders that they'll hand out a loan even when they don't think they'll get it back!
But unfortunately, it seems both groups are a fair bit too optimistic. When we asked them how loans had been repaid in the past:
- 71% of borrowers said they'd usually repaid them in full and on time, but
- Just 47% of lenders said they were usually repaid in full and on time.
- 17% of borrowers said they tended to pay them back more slowly, while
- 27% of lenders said loans were usually repaid more slowly.
Hey big lender - you're probably over 50
Lenders aged 55+. How much they have lent in a year
- 36% of people in the 55+ age group said they'd lent money, compared with 41% of 18-34 year-olds
- 6% of over-55s had lent out over £7,500
- 3% of them had lent more than £20,000.
- Just 1% of 18-34 year-olds we asked had lent out over £7,500
- None of those younger people had lent over £10,000.
So while older people (aged 55+) were the least likely to say they'd lent money to family and friends, they were also the most likely to say they'd handed out some big loans.
They were also the least likely to let it get to them when someone doesn't repay.
- Just 8% of the 55+ lenders said lending to friends and family often damages a relationship
- Almost 20% of the 18-54 year-olds we asked said it does.
Could it be because a lot of those older people have lent to children and grandchildren? Our research certainly showed that younger people were by far the biggest borrowers:
- 34% of 18-34 year-olds had borrowed money in the last 12 months, compared with
- 22% of 35-54 year-olds, and
- Just 6% of people aged 55+
And finally - some final figures
Finally, to give you some idea of the scale
£23 billion lent to friends in 12 months
- Around 19 million people say they've lent money to family and friends in the last 12 months.
- On average, they've lent over £1,250 each
- In total, that's over £23 billion of loans between friends in a single year.
* Opinium Research carried out an online survey of 2,003 UK residents from 12th to 15th April 2013. Results have been weighted to nationally representative criteria. Extrapolations to the national level are based on 2010 ONS population projections for 2013.