Digital bank Monzo has launched the offering of loans to its customers, following a trial of around 4,000 users.
If eligible, customers will be able to borrow between £200 and £15,000 for up to 60 months.
According to Monzo, this new offering comes in response to lack of transparency in the industry, and issues surrounding pricing.
Tom Blomfield, CEO of Monzo, said: “The unfortunate reality is that many lending products on the market catch customers out with hidden fees and jargon and they don’t offer much flexibility.
“That’s why we’ve worked hard to build a fair and transparent loan offering that gives customers control. This includes letting them decide when they make repayments and not penalising them for paying off their loan early.”
Monzo are offering rates of 3.7% APR representative on loans between £7,500 and £15,000, and 20.4% APR on loans up to £7,500. It also promises the maximum rate on loans below £7,500 will not exceed 24%.
In 2018, Blomfield told the Telegraph that Monzo was planning to target the Wonga market following the company’s collapse.
He also said the addition of smaller loans would appeal to customers who, for example, just need an emergency repair.
Monzo will also allow customers to change their repayment date and ensures customers will not be penalised for early or late repayments.
Last week, Monzo asked around half a million of its customers to change their PIN after a systematic flaw. It detected that some PINs were recorded in encrypted log files, which can be accessed by its engineers.
Earlier this year, Monzo bypassed its rival Revolut to become the second most valuable fintech in the UK after OakNorth. The digital challenger bank managed to up its value to £2bn following funding from a number of investors.