Consumer finance new business up 14% in August

Consumer finance new business grew by 14% in August 2022 compared with the same month in 2021. In the first eight months of 2022, new business was 21% higher than in the same period in 2021.

The credit card and personal loan sectors together reported new business up by 15% in August compared with the same month in 2021.

Michael Davidson, Chief Revenue Officer at Freedom Finance, one of the UK’s leading digital lending marketplaces, said it was becoming more important than ever to search for credit using best practice.

“It is of vital importance that borrowers are doing all the right things when they shop for credit so that they can achieve the best possible outcomes. As a very first step, shopping around is a must for credit hunters to get the best rates and most appropriate products for their needs.

“Digital marketplaces help consumers access a wide range of products and a variety of well-trusted brands and lenders. Marketplaces also use soft-search technology so consumers are only offered loans or credit cards that they know they will be eligible for.

“This is vital because not only does it help borrowers get more tailored deals for their circumstances, but it helps to avoid declined applications. This is essential to widening access to the credit market as research from the FCA shows that millions of people are deterred from applying for loan products because they are afraid of being rejected – most of these people are afraid of the impact on their credit score or because they felt there was no point in applying.

“Debt consolidation will be another major theme of the current economic cycle. It is a good way for people to convert multiple debts into a single monthly payment to make it easier to track while possibly accessing a preferential rate. There is also the option to widen the repayment term – this may make immediate payments more manageable but can mean people pay more interest in total.

“A responsible and proactive lending industry will have a huge role to play over the coming economic cycle to support consumers and help them navigate increasingly choppy waters.”