GoCardless and Aryza have found that late loan repayments in the UK have risen 24%, with mid-market lenders lagging larger peers.
Research published by GoCardless and Aryza indicates that late loan repayments in the UK consumer lending market have increased over the past 12 months, with outcomes diverging according to lender size. The report draws on a survey of 250 senior lending, collections, and risk professionals and covers repayment performance, collections operations, AI adoption, and interest in new payment methods.
According to the findings, the average share of loan repayments arriving late rose from 9.3% to 11.5%, a relative increase of 24%. The aggregate figure, however, masks clear differences between lender segments.
Performance gap between larger and mid-market lenders
Lenders with annual turnover above EUR 292 million reported a late payment rate of 8.8% in 2026, compared with 8.7% a year earlier, a relative rise of 1%. Mid-market lenders, with turnover between EUR 29 million and EUR 292 million, recorded a rate of 12.2%, a relative increase of up to 28% year-on-year. Across all segments, respondents cited affordability at origination, macroeconomic conditions, and borrower financial hardship as the main causes of late payments.
In addition, through the process of lending category, motor finance late payment rates rose from 9.8% to 14.1%, an increase of 44% that exceeds every other category in the survey. Late payments on unsecured personal loans rose by 22%, while buy now, pay later (BNPL) providers reported a 16% increase.
AI deployment and collections maturity
The report identifies differences in collections maturity across the market. While 94% of lenders use AI at some stage of their collections process, 29% say it is fully deployed in day-to-day operations. Among lenders with turnover above EUR 292 million, this rises to 59%, compared with 21% to 23% among mid-market lenders. In motor finance, 18% of lenders reported full AI deployment.
The authors note that the research does not establish causality. It does, however, show that the group whose late payment rates remained stable is also further ahead in deploying AI and automated collections. The findings suggest larger lenders are approaching operational resilience across several areas, including collections technology, customer engagement, and payment infrastructure.
Operational pressures extend beyond case numbers. Lenders spend an average of 8.3 days recovering late payments, and respondents ranked staffing capacity and cost (42%) and regulatory compliance (41%) ahead of high case volumes (33%) as their main collections challenges. Aryza noted that a considerable gap remains between experimenting with AI and embedding it in daily operations, adding that human support should stay available to borrowers when needed.
Interest in Recurring Pay by Bank
The survey also points to payment methods becoming part of collections strategy. Almost all lenders (98%) expressed interest in lender-initiated payments, and 44% said they would implement Recurring Pay by Bank as soon as it becomes available. Among larger lenders, 65% said they would seek early adoption.
Respondents ranked improved customer experience (46%) ahead of operational gains such as better conversion rates (37%), cash-flow predictability (36%), faster payments (33%), and payment visibility (32%). GoCardless noted that the next phase of Recurring Pay by Bank is rolling out to additional sectors, including personal loans and motor finance. This means two of the categories with the steepest rises in late payments will have access to the method.
Fieldwork was conducted by Opinion Matters between 4 and 10 August 2026, among 250 UK-based professionals aged 21 and over working at B2C lenders in collections, credit risk, underwriting, and related functions.
