Advice for teenagers about loans and credit

A third of 15 to 17 year olds are planning to take out loans within a month of their 18th birthday but many had no idea how they would repay them, new research has found.

A study commissioned by ClearScore revealed 94% of this age group planned to use credit to fund a major purchase before they turned 20 with 69% hoping to buy a car and 38% a smart TV.

Yet, despite plans to borrow an average of £1,891 when they became adults, a quarter admitted they had given no thought to how they would pay back the loan.

Now, in a bid to better prepare teenagers financially for adult life, ClearScore has entered into a year-long partnership with The Money Charity to offer financial education for teenagers in schools.

ClearScore will provide the funding to help the charity roll out its programme of workshops to young people in Post 16 education.

It will cover topics such as budgeting, saving, mortgages, debt, APR and credit.

So far the charity has already reached over 175,000 young people, equipping them with the information they need to help them with their financial life.

Stephanie Hayter, head of young people programmes at The Money Charity, said: “We’re committed to helping people manage their money well, and this starts at school.

“Like ClearScore, we believe young people should be well informed once they turn 18 and become financially responsible.

“The partnership will help us reach even more young people this year and provide them with the insight they need to be financially confident.”

ClearScore’s research also found that when it came to deciding which issues to discuss with children, parents tended to prioritise subjects such as safety online, the effect of alcohol and smoking on health and good manners.

The importance of credit agreements and finances was ninth on the list. Less than a third of parents said they worried about their teenagers getting into debt.

ClearScore advised parents keen to tackle the subject of finances with their children to cover the basics of savings and credit. This should include what credit is and the different forms it takes. They should also discuss credit scores and why they are so important.

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