At the start of January the FCA rate cap on Payday Loans came into the effect. The new CAP limits the rate payday lenders can charge customers to 0.8 percent interest per day and a maximum default charge of £15. What does this really mean in simple terms?
Long story short for every £100 lent alender can charge up t0 £24 per month.
The FCA expects these new rule to reduce the number of payday lenders in the UK and the amount of payday loans that are provided to consumers. This is probably true and the general consensus is that those customers who can no longer access credit through Payday lenders will look at Guarantor Loans as well as other alternative lending products to get the credit they need.
The UK is now seeing an explosion of alternative lenders entering the market place. The Guarantor Lending space is one of the areas with the most movement. Provident have now entered the market with Their Glo product which is being advertised on national TV as we speak. Everyday Loans the UK unsecured lender has now launched a Guarantor Product too, offering it to clients who don’t qualify for their main offering. Other new entrants who seem to be gaining traction in the market include Buddyloans, Consollo and Bamboo Finance.
So lots of new lenders but is this a good thing for consumers?
In reality all these lenders are offering pretty much the same Product to customers and none have done anything different model or service wise than Amigo Loans who currently lead the market. The only thing that is starting to happen is some competition on Rate with some lenders reducing their rates to appear above others in Comparison tables. Lenders competing on price is always a good thing!
Some lenders that we have spoken to also have plans to launch different products outside of their core Guarantor Loan product. Unsecured Loans at lower rates seems to be the way they are all going.
In summary lots of lenders entering the market and choice is no doubt increasing. Its a competitive space and its unlikely that they will all survive. Those that do will need to start to differentiate on more than marketing Gimmicks to challenge Amigo on market share..
Amigo Loans the Lender providing Guarantor Loans to those undeserved by the banks in the UK is up for sale.
Amigo was one of the first Guarantor Lenders and is the most successful by far to date. It was founded by James Benamour who remains the owner of the business today.
It will be very interesting to see what the market is prepared to pay for Amigo given it may have already had the majority of its growth.
Amigo loans were the first large scale lender offering Guarantor Loans in the UK. Amigo has been very successful and the company is now valued at in excess of 200 million pounds. With these types of figures its no surprise that a flood of lenders offering guarantor loans have entered the market over the last year.
The UK market is now flooded with Guarantor lenders or chasing the same customers and competing with each other. So which ones are the best? Its difficult to say nearly all the lenders out there offer similar products and lend at similar rates. One of the cheapest lenders out there is Tfsloans.co.uk who offer up to 7500 with a Guarantor. TFS are one of the older lenders in the market newer lenders include Buddy Loans, Consollo & Bamboo Finance.
No don’t some of these lenders will do well and some will struggle to compete against the bigger more established lenders like Amigo loans. Whats clear is that with well over ten lenders in the market customers will have plenty of choice.
To compare Guarantor lenders check out Ukloans.co.uk specific compare guarantor lender page which lists most of the bigger lenders and the rates they charge. Visit : https://www.ukloans.co.uk/compare-guarantor-loans/.
A guarantor loan is an unsecured loan which requires a guarantor to
co-sign the credit agreement, allowing you to take out a loan even with a poor credit history.
For those customers who do have a bad credit rating and struggle to receive a loan, then a guarantor loan is ideal as it will allow you to gain access to loans with interest rates that are not through the roof because a second person (guarantor) will agree to pay back the loan if the borrower can’t.
Typically, a guarantor will be a homeowner aged between 18 and 75, who has a good credit rating and pays their bills without trouble. Guarantors are normally friends or family who can be relied on to afford your payments if you fall into difficulty.Loans for people with bad credit still require the borrower to ensure they can afford the repayments and all customers must be over the age of 18 and hold a UK bank account.
Lenders can offer guarantor loans that stretch over terms ranging from one to five years with borrowing amounts between £500 to £5000. Guarantor loans are not payday loans and offer much lower interest rates – typically around 49% APR – without up- front charges or arrangement fees.
For borrowers who have previously been rejected by lenders due to poor credit, a guarantor loan could be an ideal solution, offering affordable interest rates and no set up fees. Due to the security provided by the guarantor, these loans will allow you to borrow larger amounts whilst allowing you to rebuild your credit score by demonstrating that you can borrow responsibly and make timely repayments.
Guarantor loans will not be the right financial option for all borrowers, however, they do provide an accessible alternative to other high interest loans and offer customers with bad credit the chance to borrow cash when
they need it.
The new FCA rules released this week as set to further support the growth of the guarantor loan companies in the UK. The new rules will put further pressure on high cost and payday lenders charging over a 100% RAPR’s and those who use continuous
payment authority extensively.
Most Guarantor lenders do not fall into this category and will be able to continue business as normal
and will no doubt start to pick up customers that are no longer serviced by lenders who pull out of the market as a result of the rules. In addition to this lenders like Amigo Loans will find it easier to compete from a marketing perspective now that payday lenders will have less profitable models and will as a result be spending to less on marketing especially in the online arena.