Smaller Sized Lenders Challenge High Street Shops

Lenders that offer credit to those with poor credit ratings often come up against the high street shops that they have little respect for. These are shops that serve a very specific purpose which is to sell their products to people who cannot afford them. Often these shops are located in working class areas where the average income is low and many people who live on lower incomes have no alternative but to shop on the high street for what they need. In these circumstances, the shopfronts are the only viable option for those who cannot access mainstream products due to their low credit rating or lack of collateral.

Lenders that offer credit to those with poor credit often face a particular problem when dealing with high street shops. This is because the lenders have a clear advantage over these shops by offering loans to those who cannot pay them back. The shopfronts often cater to those on benefits or pension and benefit schemes but this group of people are unlikely to have the money to pay back the loan if they default on it.

As a result, smaller lenders find themselves in a difficult position. They have essentially given over their entire business to the high street lender and therefore must compete on price to stay in business. In order to do this, smaller sized lenders must reduce their costs and use alternative funding streams such as leasing. However, even though this type of lending will allow the lender to reduce their costs, it may not necessarily attract enough of the local population to make a significant difference. In the end, unless there is a significant increase in footfall through the door from small lenders, the shopfront will still be largely ignored by those on benefits or pension.

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