Instalments across 3 months were studied in the previous comparison and today we’ll be doubling up to the popular 6 month loans niche. There is a heavy overlap across each, but there are less overall options when stepping up. It is however a much more competitive space to be operating in due to the instalment heavyweight brands Lending Stream and Sunny who each advertise on TV. Some further brands competing well in 2019 are One Stop Money Shop and Uncle Buck. Some big news recently coming to light was the closure of Enova’s Pounds to Pocket. This has been merged with On Stride Financial that has at least taken on Pocket’s 6m starting point.
Lending Stream was the first major brand to carve out the 6 month loans sector. They had originally offered a payday term, but were savvy to change direction when most lenders piled on short term. In time they’d of course be joined by an army of monthly firms who adapted when industry capping came into force. Stream’s main rival is Sunny. These have been the dominant forces in recent years, investing lots of money on brand promotion both online and through TV ads. The most popular sites don’t however tend to offer up the most competitive rates. Smart-Pig was the only high profile company to rank within the top 5 subprime deals below.
Instalment loans stand out more so than anything by the high volume of competing brands. There are collectively now around 40 loan options available to UK residents in each sub-niche. The boom in supply ramped up significantly in early 2015 when price capping pushed many payday firms on to this side. We’d personally assign instalment lenders as any company that offers an online loan between the period of 2 and 11 months. The most popular micro-niches for instalments are 3 month loans and 6 month loans. There is often a heavy cross-over with firms offering each of these options. We’ll however be comparing each niches individually, starting with the smaller option here today.
The history of 3 month loan products is tied to QuickQuid who have offered a 3rd monthly pay option for a long time now. WizzCash appears to have been one of the first specialised firms on this period. They launched in 2012. Historically, payday lenders would just offer rollover extensions. Rollovers do have a bad rep and the FCA has enforced a ruling that limits the number of rollovers to just 2. Quantity-wise, there are more brands offering 3 months, but this niche isn’t quite as competitive, since lenders like Lending Stream and Pounds to Pocket compete for 6. QuickQuid’s site has the most visibility in this sector, whilst Satsuma is considered as the largest instalment specialised provider.
As an extension from comparing 12 months, we’ll today double this to investigate 24 month loans for bad credit (& fair). Prime options will be explored at a later date. The niche in focus is small in demand, but we feel that it is an important one to consider for borrowers. Above all else this term helps to craft a highly affordable monthly repayment. If you were applying for £1000 then you would typically repay between £65 and £85 monthly that most borrowers should feel comfortable with. In contrast, if you just went with a single year then the payment would float between £105 and £160 that would be more tricky to keep on top off.
Keeping those repayments low is always advised since if the car breaks down or some unsuspected bill pops up you’ll be better prepared to lower that risk of a late payment or even defaulting. The number of listings below is much smaller than 12m, but you could in essence get the same term with a guarantor or logbook lender. What has squeezed down the tally of brands here is that most of the payday and instalment firms stop lending at the year point. They tend to impose expensive rates whereby for £1000 you could be paying almost the same amount in interest charges. The value in contrast today is much improved, yet still more expensive than the guarantor deals.
Doorstep loans (aka home collection loans) have a rich history dating back to the late 1800s. The now defunct Greenwood arrived first in 1877 targeting the North West region. Greenwood’s long running rival Provident who had followed shortly after in 1880 would eventually acquire them in 1977. Provident’s biggest rival today (Morses Club) themselves can be traced back early to 1878, although this was as a general drapery store. Provident’s level of dominance hasn’t really been troubled throughout their long history. Today they have approx 400,000 customers and employee 3800 staff. Morses Club are their nearest competitor with around 230,000 customers on their side. They became a much greater force when they merged with Shopacheck.
Loans at Home, Mutual and Naylors are other notable sector brands, but outside of these you’ll tend to find very small localised firms. Doorstep lenders haven’t tended to modernise their products in this internet era. In the old days, home collections were made on vouchers that could be exchanged for coal and food. Today, you’ll receive a cash loan or an alternative pack of high street vouchers. The odd lender may offer the option of a no agent loan, but in most cases the providers aim to keep their self-employed agents as an integral part of the business. The lender sites in focus are mostly under-developed and web traffic performance is often poor that you’ll see below.
This submission will focus on 12 month loans for bad credit (plus fair). We’ll compose other comparisons to cover low rate personal loan options from banks, peer-to-peer firms etc. Today’s comparison is a continuation on instalments, but rather than several months, we are specifically looking at a year. This is minus doorstep, guarantor and logbook lenders that receive their own categories. When opting to borrow over a year you’ll receive lower interest rates, but the costs are very sporadic across providers. You’ll spot this below with the £1000 charges ranging between £205.22 and £1000. Cheaper rates is a plus and at the same time more modest borrowing sums are suited at this term for manageable repayments.
The first major player to specialise in bad credit personal loans was Everyone Loans. They popped up on the high street in 2006. As back then, the application needs to be completed face-to-face. They aren’t included below since their minimum term is 24 months. Pounds to Pocket was one such notable brand that popped up in 2010. They were the first to offer same day payouts on sizeable sums (originally 24/7). TV advertising helped to put them on the map, but it is Sunny that is the dominant force today, although Oakbrook’s Likely has been making significant recent gains. The subprime giant (Wonga) has never opted to target this niche.
Personal line of credit facilities are common in banking across the globe, but not so much in the UK. HSBC for instance offers them in Canada and the United States, but not locally for some reason. It is Indigo Michael Ltd that brought this niche to life in the competitive world of short term lending. Indigo Michael was established in summer 2011 and their first project (ClearAccount) would follow in 2012. SafetyNet followed in 2014 and soon after ClearAccount was dropped. However, step forward to 2017 and they would add Tappily to their product line. This differs as being a near-prime product with higher available borrowing sums and a lower rate of interest.
As it stands, there is only a single competitor to these sister-brands. This is Drafty who had arrived in 2016. Expectation was high on the success of this venture as it came from the same team as Lending Stream that is of course one of the leading instalment lending brands. Some time back, MyKredit had also competed in this sector, but they opted to restructure their service. Ferratum has a dedicated page for a revolving product, but that isn’t available. We did also spot Plane Saver, but skipped that since it’s a credit union, plus they strictly serve workers of airlines. Choice is certainly limited, but this should change, especially due to the continued success of the featured trio.
The history of suretyship can be traced back as far as 2750 BC. Surety simply means the guarantee of a debt of one party by another. James Benamor, who was likely inspired by the usage of guarantors for mortgages, took the concept and ran with it in the world of subprime lending. This was through FLM Loans that started up in 2005. FLM would in time take on the new identity of Amigo in 2012. They have been the dominant sector force over the years, but there hasn’t been a considerable level of competition, with just around a dozen or so competing brands. This can be tied to Amigo’s dominance and the limited level of consumer demand.
It did look for some time that Provident’s GLO project would become a major contender, but they struggled to compete and would soon close. Provident Financial appeared well suited to make an impact since they have dominated doorstep lending, they have been around since 1880 and have vast resources with the group turning over £1.2 billion. Perhaps dethroning Amigo’s £200m+ empire is too big of a challenge. What has proved a more successful approach for smaller firms has been to offer both guarantor plus unsecured loans enabling more potential business. Both Bamboo and George Banco have thrived with this approach. George Banco is of note in now being part of Non-Standard Finance who also own TrustTwo.
UK payday lenders began to spring up online back in 2003. Subprime short term lending soon become big business and continual growth lasted for a good decade. A major battle for dominance had played out between 2 American groups. This included Cash America who controlled QuickQuid plus Pounds to Pocket (now merged with On Stride). Then there was DFC Global (was Dollar Financial) who had acquired Payday Express, PaydayUK and The Money Shop. British-based Wonga went on to become the industry powerhouse, but there was a storm brewing ahead when the FCA replaced the OFT as the financial regulator in 2014. The FCA would unleash industry capping in early 2015 with further rulings that pushed many firms over the edge.
They were also trigger-happy with heavy fines that only giant banks can typically manage to soak up. There had been an estimated 200 firms operating, but most of which have closed and others that survived made the switch to provide instalment products where greater profits can be sourced. The most high profile closures were PaydayUK and Wonga. Wonga’s downfall seemed inevitable when their 2015 report highlighted an after tax loss of £76.5 million. In contrast, this was a brand that at their height had surpassed 1 million customers and had been issuing approx 10,137 loans daily. They even had their logo printed on the shirt of 3 football clubs at one time (Blackpool, Hearts and Newcastle).