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The Changing Face of Consumer Financing in the UK

Consumer Finance | UK | LoanTube

What are consumer finances?

Consumer financing is the way in which customers can pay for a product in small monthly instalments, for a definitive time period. Retailers offer customers with consumer financing options to increase their affordability. The customer can choose to pay these instalments either through a loan or use their own funds. This type of a payment option also makes sense when you want to purchase something expensive, but do not want to exhaust a lot of your money paying the entire amount upfront.

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Loan Amount

£4000 -

£20000

Norwich Trust

Loan Term

1 -

10 years

4.8/5

4.8/5

Representative APR

31.90%

Minimum Age

21 Years

Minimum Income

£2000 per month

Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52.

4.8/5

4.8/5

Norwich Trust

Loan Amount

£4000 -

£20000

Loan Term

1 -

10 years

Representative APR

31.90%

Minimum Age

21 Years

Minimum Income

£2000 per month

Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52.

Loan Amount

£5000 -

£100000

Evolution Money Loans

Loan Term

1 -

20 years

4.5/5

4.5/5

Representative APR

28.96%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00

4.5/5

4.5/5

Evolution Money Loans

Loan Amount

£5000 -

£100000

Loan Term

1 -

20 years

Representative APR

28.96%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00

Loan Amount

£1000 -

£10000

1Plus1 Guarantor Loans

Loan Term

1 -

5 years

4.4/5

4.4/5

Representative APR

39.90%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.

4.4/5

4.4/5

1Plus1 Guarantor Loans

Loan Amount

£1000 -

£10000

Loan Term

1 -

5 years

Representative APR

39.90%

Minimum Age

18 years

Minimum Income

Not mentioned

Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.

How does COVID-19 affect consumer finances?

Over 13% of British adults have witnessed a decline in their income. This is directly affecting their spending behaviour since people feel that they’re unable to keep up with their financial commitments. Over a quarter of Britons have put a pause on any extravagant purchases, with over 14% delaying significant life events. This change in consumer behaviour and fall in retail transactions is bound to alter credit demand. People are having to tap into their savings to pay for essentials, which implies that the bounce back to normalcy in case of retail purchasing will be slow.

What are the changes in credit behaviour?

  • After the Coronavirus pandemic hit the UK, there was a steep decline in credit card and loan borrowing. New lending plummeted by £5.4 Bn, whereas credit card spending declined by 0.3%, on a year-on-year basis. As a result of the payment freeze on loans and credit card payments, bank repayments contracted by £1.3 Bn.
  • While 38% of Britons spend decent money only on stocking essentials, 25% of the severely affected Britons are decreasing their overall expenditure drastically. So it is safe to conclude that people are refraining from making or financing any extravagant purchase, given the current circumstance.

I financed my product, but I can’t afford to repay right now…

If you financed your purchase in the past and are feeling overwhelmed by repayments now, a good idea will be to agree to an arrangement with your creditor or retailer. You can request a payment freeze or an arranged overdraft of up to £500, which will be free of any interest. The last date to apply for a payment freeze is October 31’ 2020.

What guidelines has the FCA set for people experiencing a payment crisis?

Ever since the Coronavirus Pandemic started, the FCA has been actively involved in mitigating financial issues faced by people. However, it is in the best interest of people who can afford to repay, to resume their payments and get rid of their debt. Following are some guidelines put together by the FCA to help people burdened with payments, to sustain themselves:

  • Companies can contact customers towards the end of the payment freeze period. By contacting customers they can check if customers can afford to resume repayments. They can then agree to an arrangement for all the missed instalments.
  • People who still feel overwhelmed with payments, can approach companies and settle an agreement wherein the company reduces or freezes the repayment for 3 months until customers bounce back to normalcy.
  • It is in the best interest of companies to clearly mention if they provide payment deferrals, on their websites or catalogues.
  • Companies may charge interest even during the 3-month payment freeze period. If you feel that you cannot bear this expense, contact the company. Discuss and agree to an arrangement to resolve this issue.
  • The payment freeze requested owing to financial hardships due to the pandemic will not have a negative impact on your credit report. Keep in mind that there are other factors that also come into play while assessing a person’s creditworthiness.
  • Companies can’t charge you money for granting a payment freeze.

In conclusion

The joint measures of the UK Government and FCA have so far been helpful in alleviating people’s worsening financial conditions. However, people are still apprehensive about spending money as the pandemic has instilled an unforeseen fear in their minds. The road to normalcy is filled with obstacles as people have drastically changed their spending habits. Although saving money is a habit Britons should’ve assimilated and applied years ago, it is imperative for people to spend money to restart economic growth.

Representative 79.5% APR

Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk

Credit subject to status & affordability assessment by Lenders.

LoanTube is a credit broker and not a lender.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.

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Representative APR Example

The rate you are offered will depend on your individual circumstances.

Representative APR Example: On an assumed loan amount of £1,000 over 18 months. Rate of interest 59.97% per annum (fixed). Representative 79.5% APR. Total amount payable £1,554.10 of which £554.10 is interest. 17 equal monthly repayments of £86.09, and the final month’s payment of £90.57.

Some of the offered loans might be classed as High Cost Short Term Loans. APR rate starts from 18.22%. The maximum APR rate is 1721%, but you will get a personalised rate tailored to you. The minimum repayment term is 3 months, the maximum repayment term is 7 years. The minimum loan amount is £250 and the maximum loan amount is £35000.

Warning: Late repayment can cause you serious money problems. For more information, go to moneyhelper.org.uk

Credit subject to status & affordability assessment by Lenders.

LoanTube is a credit broker and not a lender.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on any debt secured against it.

Not all borrowers will qualify for a loan. The operator of this website does not engage in any direct consumer lending, we simply provide you a FREE loan brokering service. This means LoanTube does not charge customers a fee for using its introducer services, but it receives a commission from lenders or other brokers if a customer enters into a consumer credit agreement with them following an introduction by LoanTube.

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