Customers drawn to providers of quick loans

Borrowers are being drawn in increasing numbers towards more agile and smaller providers of quick loans, according to a new report from PricewaterhouseCoopers.

According to PwC, instant cash loan companies could eclipse credit cards in popularity, becoming a mainstream borrowing method within the UK.  The sudden explosion of borrowers seeking payday advance lending can be traced to an inability to rely upon traditional lending, such as credit cards.

However, payday lending, which has up until recently been the purview of low income earners with higher risk profiles, the innovation and convenience offered by these loans have worked to attract a more prosperous and broader range of customers, with traditional High Street lending suffering as a result.  PwC director, Simon Wescott, remarked that while payday lending may have initially been seen as a ‘last resort’ loan, mainstream lenders need to realise that an increasing number of customers are pleased at the innovative and convenient service provided to them by these more agile and smaller lending providers.

In fact, Mr Wescott predicted that payday lenders are likely to make further forays into the financial market by offering more conventional products with longer loan terms such as credit cards.  The PwC director also said that current accounts could be in the future for payday lenders as well, something that could be seen as a serious threat to the ‘Big Five’ high street banks that currently hold 80 per cent of the current account market.

While many lenders have been under fire from detractors for allegedly targeting classes of borrowers by purposely encouraging them to take out loans that would be beyond their means to pay, consumers with economically-linked anxiety find the limited size and length of payday lending appealing, said Mr Wescott.

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