Logbook loans sprang to life in the late 90s with the first active lender (Mobile Money) arriving in 1998. The controversial Logbook Loans brand was formed shortly after in 1999. They would go on to become the dominant sector force for many years. This business that was controlled by former footballer Iain Shearer would however eventually crumble. As far back as 2009 it was determined that their credit licence would be revoked. The key issue was fake threatening legal letters being sent out to customers. That company headed for administration, but the brand/site would live on when Hermes Property Services purchased. Hermes later merged with Loans 2 Go in January 2015 that quickly created the clear market leader.
This subprime sector isn’t in great shape these days. This is the first time that we have compared lenders across a field whereby not one single competing site had an Alexa UK rank. Logbook lending did look to be in a good place back in 2014 when the FCA valued the industry at £76 million. In this year 52,580 Bill of Sales were recorded, but moving forward these tallies would quickly fall. Many firms also had networks of localised outlets to speed up the process, but these days they simply send reps your way. It isn’t clear why public demand has dropped off. We’d hazard a guess that expensive costs and poor media press have been major contributors.
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 The 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.
Our bad credit personal loans series will switch up here to 24 month loans (doubling up from a year). Many of the instalment lenders stop offering terms at the year point and so this page will be made up of a very small collection of providers. There have also been a few brand closures with the most recent ones including Juo and Oakam. The quantity of unsecured 24 month loans lenders may be limited, but when security is added the variety picks up through the various guarantor, logbook and homeowner-only solutions. The backings provided with those help to minimise default risk, whilst each featured lender must hand their full trust in yourself and your past borrowing history.
The most interesting addition of the pack today is Everyday Loans who were skipped previously since their starting term is 18 months. Everyday is arguably the biggest force in subprime lending. Most of the dedicated web brands are still gathering market experience whilst this company has been in business since back in 2006 through their extensive retail network. Their owner Non-Standard Finance also controls George Banco, Loans at Home and TrustTwo. Overall market share is generally more sporadic due to the rise of several web firms noting 118 118 Money, AvantCredit, Bamboo, Likely and On Stride. Quality is evident, but quantity is thin, with just 10 brand options attached within this comparison today.
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 440,000 customers (was 697,000) 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.
Personal loans for bad credit will be analysed here beginning with 12 month loans (24 months will follow). There are 2 types of lenders targeting this niche. You firstly have the various firms that specialise on instalments (payday terms may also be provided). These companies often stop exactly at the 1 year point. Then you have the more long term specialised firms who typically start from 1 year onwards. There is a significant difference between these groups in product value. Most of those leaning on the instalment side charge £900+ for a £1000 loan. Value from personal loan lenders in contrast is much more competitive. The top 5 deals all come in at under £500.
Sizeable subprime lending was championed by 2 brands who won’t actually be included today. This is since Everyday Loans have a minimum term of 18 months and so we’ll include them at 24m. Then there is Pounds to Pocket who have recently closed having merged with On Stride. Everyday has been in business since 2006 and is famed for their branch network. Pounds to Pocket helped to develop this niche online when they advertised aggressively on TV soon after launching in 2010. There are several big names competing for market share, but there is no such dominant force as seen in other sectors be that Provident (doorstep) or the now closed Wonga (payday).
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).