Analysis of the Logbook Loans market & initial proposalFebruary 2014

Non-standard lending

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

The commercial NSL market lent £6.4 billion gross in 2012, compared with £4 billion in 2008. This excludes borrowing from private individuals and covers only commercial lending. The amount of gross new commercial lending rose by 60% between 2008 and 2012. Private (non-standard) lending has increased by around 31% between 2008 and 2012. Over one in ten adults have used one form of NSL product over the past two years. Private loans to individuals are the most important form of non-standard lending, followed by using a credit union and payday loans. Based on their usage, NSL products split into three types: Those used mainly by ABC1 consumers – e.g. private lending, motor vehicle logbook loans.Those used mainly by C2DE consumers – e.g. loans from a credit union, payday loans, home credit, buy to rent retail excluding car loans, loans from a peer-to-peer lender. Those used evenly across the socio-economic grades, but which have a bias towards adults in social housing (e.g. housing association or local authority renting) – pawnbrokers, family loaning pool, cash advance on salary from an employer and mobile phone loan by text. 14% of adults aged 18+ have used a NSL product in the past two years, equivalent to 7 million adults. Over this time, 5% have taken a private loan from individuals, friends and/or family, 3% have borrowed from a credit union and 2% have taken a payday loan.

NSL typically viewed as convenient

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Consumer attitudes towards NSL products can be grouped into three main categories. On the plus side, they offer quick, convenient and easy solutions to financial problems (i.e. making it easy and convenient to pay for things). They can also aid financial management and planning (i.e. making it easy to track spending). However, on the negative side, they can lead to financial entrapment or pain, leading the financially naïve or disorganised into debt. The more borrowers have been turned down for mainstream finance, the more likely are they to use a NSL product. In particular, users of commercial NSL products are likely to have been turned down for a credit card, bank overdraft or unsecured personal loan. Thus non-standard lending is often used to finance a specific expensive item (as a personal loan or credit card would), pay for day-to-day household spending or outstanding bills (like a credit card or overdraft would), or finance a particular occasion (as a personal loan and credit card would).

Secured personal loans

Source: Key Note, Motor Finance2013

Main media advertising expenditure on secured personal loans fell significantly during the credit crisis and the resultant recession but has been recovering, increasing from £708,000 to just under £2m between 2010 and 2012. Logbook loans are loans secured against the value of a vehicle the borrower already owns, using the vehicle as collateral rather than a house. It is unlikely, therefore, that these loans would be used for motor finance but individuals may wish to purchase a second car by using finance raised in this manner.

Use of NSL products in the past 2 years

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

NSL: demographic characteristics

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Use of NSL products, by financial health

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Use of NSL products, by social grade

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Current type of borrowing, by future intention (among borrowers)

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Payday lenders petering out?

Source: YouGov SixthSense, Non-Standard LendingMarch 2013

Payday lenders are the more vulnerable in terms of losing future borrowers. A much higher percentage of those that will not continue borrowing in the future currently use payday loans compared with those that will continue to borrow. In contrast, home credit, pawnbrokers, peer-to-peer lending and a cash advance on salary look set to grow in importance in the future. The weakness of this sector is that future growth will be concentrated among a less financially healthy base of customers.

Quick Review ~PPC

It's a heavily subscribed marketplace where each player will consistently outbid each other to achieve the top spot.

The current winners seem to be Google and sites with big pockets.

Quick Review ~ PPC

Analysis of your current search terms indicates you are likely to be spending as much as you can on the specific terms your current provider has been using Approx 30 clicks per day to generate 7-10 applications suing Google estimator

Your options? Go wide… target ambient key words and phrases at lower rates

Quick Review ~ competitors sites

Clear criteria listed

Cluttered interface, text heavy

Meeting points and store locator

No quote form on front page

Specifically targets the prestige car end of the marketNo strong calls to action

Landing Pages could work?

A number of competitors are using custom landing pages to pull in relevant traffic.

Typical landing page subject areas are around log book loans, using your car as security, why a secured loan against your car may be better than a pay day loan etc.

Your social media

We touched on this briefly. There's been a lot of talk about how great social media can be but also some horror stories of companies spending a fortune and getting it wrong. We can help you engage more positively with social media platforms like Twitter and Facebook.

We think you should consider the most appropriate tools for your business. What's worse than not being on social media at all is when a business sets things up and leaves it all empty. This often sends completely the wrong message to potential customers who, more and more, are using social media to validate buying decisions.

Thinking about Social Media…

6K 450 200

Easily create an auto feed using RSS and XML to auto tweet consumer relevant news. Turn on notifications for replies and direct messages and have someone check the accounts daily from their phone

Custom Landing Pages

These are really simple to write. You, or a half decent copy-writer, could generate several relevant pages within a few hours. They don't need to be long, just a few short paragraphs dealing with a common customer question - and make sure you include your quote form and telephone number on each of these pages though!

About Goodman & Next Steps

We trust you found this market analysis and proposal of interest Our services all share a common foundation based on as full an understanding as we can have of our client’s or potential client’s businessAny media planning or design briefs are considered in relation to realistic market potential and trackable spends We want to make recommendations based on facts not feelingsAs well as our own experience, we now have direct access to a plethora of premium insight and planning tools including YouGov SixthSense, Key Note, IBISWorld, Trajectory Partnership and Iconoculture in addition to a powerful global news database, Nexis, so as we are tracking your markets we can update this as soon as new information is released

Goodman is a fully accredited media and advertising agency based in central London. Established in 1997 we pride ourselves in always working hard to buy better and more effectively for all our clients regardless of budget or business type

To move this all forward, please let us take care of everything – just give us a call 0845 225 55 55 to arrange a time to work out the details of what you want to happen – if its not too presumptuous we really look forward to working with you...

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