About the CFA

Our role
The Consumer Finance Association (CFA) is a trade association which represents the interests of businesses offering short term, unsecured personal loans, sometimes known as payday loans. CFA members are licensed and regulated by the Office of Fair Trading.

Members offer a modern and innovative form of lending that is not designed to build up long term debt. Customers borrow what they need and pay it back quickly. Delivery is both traditional through high street offices and innovative via the internet. The UK government promoted internet lending by enabling credit contracts to be completed on-line from late 2004. The European Parliament is opening up cross-border lending in the European Union from June 2010.

Who uses payday loans?
The typical payday loan customer is a young adult or in early middle age, and relatively free of financial commitments such as a mortgage or dependent children. S/he may be averse to running up long term unsecured debt but would rather choose to borrow and repay over a short period to ease personal cashflow when a number of bills arrive at once, or to fund an acquisition or activity.

Payday loans are designed to deal with these very short term personal cashflow issues. Lenders make the point to their customers that a payday loan is not appropriate if a larger loan repayable over several months or years is required. What is on offer is access to a few hundred pounds to deal with an immediate requirement, which the customer knows s/he can repay soon usually within 42 days or less. Payday loans only account for about 0.05% of all UK unsecured consumer credit.

Slightly more men than women use payday loans (55% - 45%). Around 70% of customers are aged between 25 and 45, and tend (60%) to be single rather than married or cohabiting. Most do not have dependent children. Only around a quarter of customers are home owners, but it would be wrong to think that they belong to low income or vulnerable groups. All payday loan customers must have a bank account and a job. The vast majority have an annual income of between 12,500 and 30,000; 18,000 being an approximate average.

Customers appreciate this style of lending that does not run up large, long term unsecured debt which has long been a significant feature of the consumer credit market generally. Customer satisfaction levels are high, complaint levels are very low and friendly and helpful staff highly valued. In one recent survey, 87% of customers said they would recommend the use of their payday lender to a friend.

The facts about payday loans
Payday loans are designed for those who have bank accounts, a job and disposable income. They are not loans for people on benefits or very low incomes. To get the facts about payday loans, you can download our new information leaflet by clicking here.

The CFA chief executive was interviewed about payday loans on the BBC Radio 4 Today programme. Click here for a transcript.