Are We About To See New Lenders

After a difficult few years for the secured loans industry it finally seems that things may soon get better. Not only has one of the existing lenders reduced its rates in an effort to attract more business but it seems that two more lenders are going through the set up process and want to enter into the market early in 2011.

The news is a breath of fresh air to anybody still working in the industry and to prospective borrowers alike, as an introduction of some stiffer competition can only be beneficial to the industry. There have not been enough lenders for such a long time, which has allowed the remaining lenders to charge what they like and be pickier with regard to who they are prepared to lend money to. The lack of any serious competition has also seen a massive increase in the number of alternative type lenders who have been able to charge ridiculous interest rates to people who can ill afford to pay them, such as;

Log Book Loans

Logbook loans are loans that are secured on your car log book and can be taken out by anybody aged 18 or over that owns their car outright, no matter what their credit history; they are available for amounts from £100 to £ 25,000. Even though the lenders have the security of holding the V5 document (logbook) and MOT certificate which means that they can sell the car to recover their money should the repayments not be met, they charge ridiculously high interest rates up to 437.4% APR. However because they will lend to bankrupts and do not carry out any credit checks the uptake on this type of loan has increased hugely over the last two or three years.

Guarantor Loans

A guarantor loan is a loan that is co-signed by a guarantor, which in simple terms means that if the borrower fails to keep up with the repayments then the lender contact the guarantor to request payment is made. Which means that this is a very low risk loan for the lender, because although no credit check is carried out on the applicant, and the applicants credit history or residential status is not taken into consideration when assessing the application. The guarantor will be searched and needs to be a UK homeowner with adequate income to make the repayments should the applicant default. However this again does not restrict the lenders from charging relatively high APR's they invariably range from 42.6% APR to 62.4% APR variable. With guarantor loans the borrower can borrow any amount from £500 to £5,000, and the loan can be repaid for terms from 12 to 60 months.

Loans Till Payday

A payday loan is probably the loan type that is most popular of the newer less traditional loan types, and probably the one that receives the most bad press. A payday loan is basically a short term loan that is taken out until you next get paid, it is available for amounts from £80 to £1000 depending on the lender. Also the interest rate charged varies between 66.39% Apr for smaller amounts up to £2689% APR for higher amounts. This typically equates to a charge of between £20 to £272 for every £100 borrowed.

In Summary

The introduction of more normall lenders offering cheaper loans than those that are currently available can only be a step in the right direction. The UK consumers' appetite for loans has not diminished as a result of the credit crunch which means that the lenders have had it all their own way for far too long.


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Steve Smith works for a Guernsey based UK loans broker where you can apply for all types of loans including secured loans, personal loans, guarantor loans and loans for people with bad credit why not visit today