What does the future hold for quick loans?
With the Coronavirus pandemic showing little sign of slowing, the future is certainly looking bleak for businesses and individuals up and down the country.
With furloughed staff hoping to still be employed come October and self-employed people praying for a grant extension, it seems that life is on hold for many.
Cashflow is a major worry for every household and with workers suddenly only receiving 80 per cent of their wage (capped if they earn over £32,000) each month, many are finding themselves scrabbling around to make ends meet.
For those with mortgages, rent, nursery fees, student loans, energy bills and more to consider, these are testing times.
With many looking for financial help outside of traditional banking, we look at quick loans and what the future holds for this kind of instant cash help.
A helping hand
While banks are offering mortgage extensions and some councils prepared to freeze council tax bills for a while, many are forced to take up these actions.
But there are other short-term lending options available.
Those facing mounting expenses related to COVID-19 or simply have a poor credit history, can apply for money quick, through a company such as My Quick Loan.
Payday loans are generally for those without emergency savings, and those who are unable or intimidated by traditional bank loans. Their convenience is certainly a plus point for people, even when they understand they are being charged a higher rate of interest on their borrowed amount.
Highs and lows
Like other industries, the quick loans market is facing a tough time, with fewer people taking up loans compared to the same period in previous years.
Wonga was once the biggest payday lender in the UK – a household name that was enormously successful – until stricter regulations curtailed its and other payday loans companies’ lending, resulting in its demise in 2018. QuickQuid went into administration last year.
But this type of unsecured finance has always been popular as it is often suitable for those in poor credit or people who needed short-term assistance.
And with funds often transferred the very same day if applied during business hours, this is the ideal credit solution for many.
The impact of Coronavirus on the industry
Clearly Coronavirus has impacted on the industry with fewer applications being received than in previous years.
However, 20 per cent more self-employed people are applying for short-term loans. This could be due to the uncertainty over whether government grants will be extended for these workers.
But during the lockdown, while spending is up on food and energy bills, it’s plummeted on entertainment, eating out and high street retail.
With people taking mortgage breaks and pausing other bills, they may find they have more money leftover at the end of the month than usual, resulting in a lesser need for quick loans.
But perhaps surprisingly, it is NHS staff who are topping the lost of employers still taking on loans, according to the infographic (below) compiled by 1st Class Loans.