Digital bank Monzo offers new short-term loans

After piloting the loans with 4,000 of its users last year, the GBP 2 billion company has now decided to roll out loans between GBP 200 and GBP 15,000 to its current account customers. Despite racking up £85 million in losses since it was founded five years ago, Monzo is determined to become profitable and move towards sustainability.

Monzo has racked up USD 85 million in losses since it was founded. Unlike payday lenders, who usually scorch customers with interest charges equal to an annual percentage rate (APR) of 1,000%, Monzo is only charging a maximum 24% APR on loans up to GBP 7,500, and loans worth between GBP 7,500 and GBP 15,000 are charged as low as 3.7% APR.

Monzo is the second digital bank to offer personal loans after Starling Bank launched its maximum GBP 5,000 loans, but the competition may not end there, as both Revolut and N26 are tipped to bring them to the UK market soon.