The non-standard credit market in the UK – sometimes called the sub-prime market – comprises 12 million people, most of who are of modest means, and so require particular types of credit product to meet some of their credit needs.
What the various types of lending in the non-standard market have in common is that there is a high level of service included within the products when compared with more mainstream products.
Types of non-standard lending include home credit, credit unions, the Social Fund, pawnbroking, payday lending, certain types of credit card, certain types of personal loan, certain types of car finance and certain types of mortgage.
Provident Financial operates predominantly in three of these types of lending: home credit, credit cards and car finance and started an online instalment lending business, Satsuma Loans, in 2013.
Lending to those of modest means has a long history. During the industrial revolution 'tallymen' (so-called because they kept a tally, or record, of the repayments collected – often making a physical mark with a knife on a 'tally stick') would sell cloth or boots to working people and spread the cost by collecting the repayments weekly. In 1880, our founder, Joshua Waddilove, realised there was a need for small loans to working people with repayments collected weekly from their homes. The basics of Provident Financial's current home credit business are essentially unchanged from the business set up in 1880.
Online instalment lending
Loans of between £300 to £800 with weekly instalments over 13 or 26 weeks.
Provident Financial markets its credit cards through Vanquis Bank which started trading in 2003. There are two particular features that make Vanquis Bank a successful non-standard credit market offering. First, its customers’ credit lines are much smaller than those of most other credit card providers – initially £250 or £500 – and rarely more than £3,000. And second, we have a much greater level of telephone contact with our customers, which ensures that if there are difficulties, they can be sorted out quickly.
Moneybarn provides car finance to non-standard customers in the UK through secured conditional sale agreements. These agreements are suited to non-standard customers as their asset backed nature makes them more easily accessible due to the security provided to the customer and to Moneybarn. By assessing every customer’s personal history, needs and situation, Moneybarn can make responsible lending decisions and offer affordable payment schedules.
A factual introduction to home credit and some of its associated issues.