8 On your side: Inflation causes more people to borrow money from family, friends
LAS VEGAS (KLAS) — Inflation is pushing more Americans to borrow money from family and friends, according to the Census Bureau’s latest household finance survey.
The study also found that around 25 million people relied on loans from relatives last month, up from 19 million the previous year.
Kaben Clauson is the co-founder of Pigeon Loans and said soaring inflation prices are forcing many people to consider other options to meet their short-term financial needs.
One reason for the increase in the number of people seeking loans could be that 45 million Americans are considered “invisible credit,” Clauson said.
“These are people who have such a damaged credit score, their only option is to go to payday lenders, and young people who don’t even have a credit score yet,” Clauson added.
It has tips for those looking for other options.
Clauson says he and his partner formed Piegon Loans 18 months ago.
The service it offers can become a tool to help friends and family better structure the borrowing process.
It is software that creates contract, accounting and payment reminders. Everything is automated and it costs the lender nothing and the borrower just over five dollars.
“What if more like other countries where people are lending all the time, like Southeast Asia and Africa, we normalize that kind of behavior in America, and I think we’re going to need that as income inequality takes off, more people are going to need help from their neighbour,” he added.