Freedom Finance comments on FLA consumer credit data
Consumer finance new business grew by 13% through 2022 compared to the previous year according to the latest FLA data in a strong year for the sector as continued innovation improved the experience for borrowers to ensure they were able to access more products that suit their personal circumstances without the dear of decline.
The credit card and personal loan sectors together reported new business up by 17% in 2022 compared to 2021, despite credit card rates reaching their highest level since 1998 and continued growth in personal loan rates. Auto finance was up by 9% and retail finance by 7%.
Michael Davidson, Chief Revenue Officer at Freedom Finance, one of the UK’s leading digital lending marketplaces, commented: “2022 was a strong year of new business across the consumer credit market with personal loans, credit cards, second charge mortgages and retail finance all seeing increased levels of borrowing.
“Growing innovation has driven this expansion. The retail and auto finance markets, for example, have benefitted hugely from the embedded finance revolution which makes it easier for consumers to access more loan products that are a better fit for their circumstances to support their purchases.
“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. It also helps to widen 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 – nearly half (46%) of those put off from applying for credit said that they were afraid of the impact on their credit score or because they felt there was no point in applying.
“Debt consolidation is 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 has a huge role to play in supporting consumers and helping them navigate turbulent times.”