The short-term loan industry is a on a tear away at this moment in time. This fact is not only pertinent to the United Kingdom but the trends can be traced to all over the world. Over the past decades, the initial rise, the eventual collapse, and the slow recovery of the world economy has greatly affected the financial well-being of the people. Furthermore, insolvency experts believe that such trends will continue to prevail in the face of weak economy and slow growth, and inconsistent job market. Those who are short on funds will continue to visit payday lenders located on High Street or vendors over the internet, for a short term fixes to their monetary needs.

Industry Facts

According to a study conducted by the Office of Fair Trading, the sector consists of pawnbrokers, payday loan, home credit, and rent-to-buy credit markets. Financial instruments provided by these lenders are typically utilized by low-income consumers and daily wage workers. Mainstream lenders such as banks, credit unions, and credit card companies do not cater to such consumers. The study further elaborated how these tools are useful and fill a void that exists in the credit market, providing much needed relief  to consumers who find themselves in a cash crunch.

The Numbers Involved

Although there is no official data when it comes to the number of people who use these payday loans, independent studies conducted by various think tanks reveals that an estimated 1.2 million people from across the country collectively took out more than 4.1 million GBP in loans in the year 2010 alone. These numbers transposed onto today’s economic conditions will be much higher, further strengthening the argument, that not only people find these loans useful and beneficial, there are hardly any viable alternatives to payday loan lending.

A more recent report developed by the OFT  (Office of Fair Trading) suggests that numbers in the year 2012 may have been the highest lending numbers the government may have seen since the inception of the payday loans themselves. The report suggested that as much as 1.8 billion GBPs were loaned out to be public, with the number of borrowers also rising exponentially over the past 4 years. This can be narrowed down to stronger credit laws and eligibility stipulations introduced by the banking sector following the debacle of the economic meltdown experienced between the years of 2008-2010.

The Lenders

According to OFT as of November 2012 the number of lenders within the United Kingdom stood at 240. With the maximum number of loans concentrated between the top 50 payday lenders. In addition to those, there were nearly 100 different vendors who were operating solely through the internet, offering cash at low eligibility requirements, though they were a tad bit more expensive as opposed to the traditional payday lenders.

All in all, the industry is expected to grow further as large corporations continue to ignore the plight of the working class of the United Kingdom.

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