UK Is In Line For Borrowing Crackdown – It seems today consumers in the UK are spending and borrowing at an alarming rate. Store cards, payday loans and car loan finance regulators are worried and are planning to put a stop to excessive consumer borrowing.
Last year NewDay, a finance provider of credit card deals and store cards, saw a 32% growth in the amount of lending they offered, as well as over one million new customers that signed up to borrowing.
Enova, Britain’s leading payday loan credit lender told us it had seen a 16% growth this year in the first quarter, compared to last year. It seems Britons are increasing the need for credit and the consumer credit binge seems to be on the rise.
Another well-known finance giant, Lloyds Banking Group, saw a 10% growth in its finance division compared to any other year in its first quarter.
Financial Regulators Getting Involved
Regulators are planning on cracking down on consumer borrowing and this information makes for a worrying time for the country.
Regulators plan to work with lenders and ensure they are carrying out appropriate affordability checks on potential customers and to ensure they provide tighter underwriting rules on lending.
On the flip side, however, only this month banks had told Bank of England that they had drastically cut back on credit available. Lloyds stated that their main growth was with car finance.
It seems that car finance is growing in line with that of the credit card market. However, unsecured personal loan applications seem to be reducing. This trend seems to reflect what is happening in the finance market as a whole.
Enova are owners of QuickQuid, Pounds to Pocket and On Stride Financial. On Stride Financial helps families with debts of up to £10,000 with rates of 29%.
NewDay provide credit cards for ‘older’ applicants. Aqua and Marbles help those that have problems getting credit and have interest rates starting from 34.9%.
Last year NewDay had over 632,000 that took out store cards with companies they provided. 273,000 Applicants last year took out Aqua cards and 116,000 took out Marbles cards.
Although this consumer spending has boosted the economy, it seems the economy only grew by 0.3% in the first 3 months of this year. This is less than the 0.7% in the previous quarter.
With the new era of consumer spending and borrowing and with regulators clamping down on who can get a loan, it may be an uncertain time for the UK’s economical future.