Consumer finance new business grows by 14%

New figures released by the Finance & Leasing Association (FLA) show that 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, while the retail store and online credit sector reported new business growth of 7% over the same period.

Commenting on the figures, Geraldine Kilkelly, Director of Research and Chief Economist at the FLA, said “The recovery in the consumer finance market continued in August, with growth reported across each of the main finance products.  Annual consumer finance new business provided by FLA members was 7% higher than in February 2020, while the value outstanding contracts was at similar level to pre-pandemic.”

“During the coming months when many consumers may be facing increased pressures on their household incomes, the consumer finance industry remains committed to meeting demand and providing targeted support to customers who may need it.”

“As always, customers who are worried about meeting payments should speak to their lender as soon as possible to find a solution.”

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.”

Commenting on the figures, Michael Davidson, Chief Revenue Officer at Freedom Finance 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.”

New consumer credit lending

	Aug 2022	% change on prev. year	3 months to Aug 2022	% change on prev. year	12 months to Aug 2022	% change on prev. year
Total FLA consumer finance (£m)	9,604	14	28,926	10	114,392	19
Data extracts:
Retail store and online credit (£m)	745	7	2,288	4	9,640	5
Credit cards & personal loans (£m)	5,255	15	15,198	17	58,388	28
Second charge mortgages (£m)	153	61	430	45	1,465	53
Car finance (£m)	2,992	13	9,799	3	40,702	11