Pawnbroker Loans Rise Nearly Three-Fold
Cash-strapped Brits have been flooding to pawnbrokers for short-term loans as they struggle to make ends meet.
High-street pawnbroker Cash Converters saw its UK personal-loan book grow to nearly four times its 2010 value, from £2.3m to £8.5m in the twelve months to the end of December.
The company, which has 208 stores in Britain, launched an online application process for loans in October and said it is showing "promising early results".
Customers can access between £500 and £2,000, to be paid back within 7 months.
96% of those applying for an online loan were new to Cash Converters, but the numbers highlight the growth of payday lenders over traditional high-street banks.
Although these 'alternative lenders' charge substantially higher interest, they are seen as being more convenient by consumers, many of whom have bad credit histories.
However the high interest and bad credit proved a bad combination in some cases - the number of customers failing to pay back their loans to Cash Converters rose by more than a fifth in the last six months of the year, with bad debts at 11% of the total amount lent out.
The company said its new stricter lending criteria stricter, customer database and dedicated collections manager will help bring down bad debts.