US Firms Step into UK to Fill Wonga Fast Loans Void

The UK personal loans market has been the subject of considerable upheaval over the last few decades. There once was a time when obtaining any sort of credit involved dressing in your finest clothes and be interviewed by your bank manager. Credit rules were stringent and for those that were self employed with no accounts or with ‘bad’ credit history, securing a fast loan from traditional high street sources was almost always a dead end.

For hundreds of thousands of people, getting fast loans meant turning to the likes of Provident Personal Credit, The high interest cash loans were collected weekly by ‘the man from the provvy’. Later with the advance of the internet and relaxed lending laws, people could secure payday loans, secured loans and cash advances within minutes simply by filling in a form online. Instead of turning to the traditional door collection lenders, people turned to the likes of My Quick Loan and Wonga to meet the credit needs.

The Fast Loans Story

The collapse into administration in August 2018 of payday lender Wonga, taken down by growing number of compensation claims, closed the book on what was once a toxic and notorious emblem of the UK’s household debt crisis. Once touted for a stock market flotation, the company whose customers faced interest rates as much as 5.853%, was valued nearly £1bn.

However, in 2015, financial regulation was brought in to end the wild wild west days of the whole payday and fast loan lending market. Over 50% of payday firms ceased trading within a year of regulation. Many UK firms, especially Wonga, failed to adapt to the new regulation and more internet savvy and foreign firms saw an opportunity that appears to be paying off.

The Americans are Coming!

Enova, based in Chicago, operate the QuickQuid as well as Pounds to Pocket and On Stride short term loans companies. Following the Wonga demise, they saw their UK revenueleap £29m. a rise of over 20%.

Similarly, Elevate Credit, the parent company of Sunny, based in Texas, saw their UK revenue increase 23% since Wonga’s well publicised downfall.

Buoyed by rising interest rates, high repayment rates and still relatively lax laws despite financial regulation, foreign investment into the fast loans and short-term loans market is seemingly pouring in. How this affects an already volatile industry in the long term remains to be seen. However, the short term loans market is steadily growing again post 2015 regulation and the choice offered to the potential borrower via the world wide web, has never been better.

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