Debt consolidation

Debt consolidation
A step-by-step guide
What is debt consolidation?
The combining of all existing debt into a single, new loan that is more
manageable and affordable. The new loan will typically have lower
monthly repayments than those on existing debt.
There are 3 important factors to successfully consolidate your
employees debt:
1.  Ability to spread repayments over a longer term
2.  Saving on interest costs over the lifetime of their loan
(“lifetime savings”)
3.  Consolidating all debts to avoid a debt extension/spiral
An effective pay rise is achieved when less of an employee’s monthly
salary is needed to service their debt.
Over the next few slides we’ll walk through how we achieve this at
Neyber.
The average UK household currently has more than £11,800 in
unsecured debt (TUC analysis 2015).
Almost two thirds of employees say they have borrowed in the
last year to meet their basic financial needs (The DNA of
Financial Wellbeing, Neyber).
Financial stress is further driven by the excessive fees charged by
lenders, particularly the payday lending market where in many
cases the APR can reach over 1,000%.
True debt consolidation
Lower monthly repayments – borrow for up to 5 years at a low rate
Neyber offers borrowers flexible loan terms of up to 5 years giving
employees the ability to spread loan repayments over a longer period.
In the example, consolidating existing debt with a Neyber loan over 5
years allows your employees to reduce their monthly repayments by
£109 – This equates to an effective pay rise of over 5%.
Over 90% of our customers borrow for more than 2 years. Trying to
consolidate debt over 2 years or less is typically unsuitable for
employees and would actually lead to an increase in monthly
repayments by £145 (+47%).
Example loan comparison:
Existing
Debt
Neyber Loan
5 years
Comparable Loan
2 years
Amount
£10,000
£10,000
£10,000
Example APR
29.0%
6.9%
7.9%
Debt repayment period
20 years
5 years
2 years
Monthly repayment
£306
£197
£451
Difference in repayment
-£109
£145
-36%
+47%
>5%
-8%
% difference
Effective % pay rise
Note:
(1)  Minimum monthly payment is defined as the maximum of either 1% of current balance + interest or £25
(2)  For credit card debt the minimum payment amount may reduce as repayments are made to the outstanding balance..
(3)  Credit card interest rate of 29% represents average rate across current Neyber debt consolidation customers
(4)  Existing debt is composed of a 50% split between credit card and unsecured fixed term credit (over 5 years)
(5)  Loan size is based on an average of our portfolio of debt consolidation customers
(6)  Average UK salary of £26,500 used to calculate pay rise across all loans which is reflective of current debt consolidation customers
(7)  Representative example APR is 4.9%. APR based on current customer base. Typical example: amount of credit £7,000. Term: 3
years. Interest: £529.30. Administrative fees £0. Monthly payment of £209.15. Total repayment £7,529.30. The rate you are offered
will depend on your individual circumstances.
(8)  All figures have been rounded to the nearest whole number
| *All figures quoted are based on existing Neyber customer base, as at May 2016
| Employees can apply for loans for up to 5 years with counter offers for up to 7 years
True debt consolidation
Save on interest repayments
Our simple and fair rates range from Great (4.9% APR), Good (6.9%
APR) and OK (9.9% APR) in order to accommodate for a variety of
your employees circumstances. By making our rates more accessible
we are allowing them to consolidate their debts into one single
monthly payment and save on interest costs.
In the example, Neyber provides a saving of up to 87% in total interest
paid over the term of the loan. This lets your employees be free of
their debt within a significantly shorter time period whilst managing
more affordable monthly repayments.
Example loan comparison:
Existing
Debt
Neyber Loan
5 years
Comparable Loan
2 years
Amount
£10,000
£10,000
£10,000
Example APR
29.0%
6.9%
7.9%
Debt repayment period
20 years
5 years
2 years
Total interest payable
£13,509
£1,793
£814
Lifetime savings
£11,716
£12,695
-87%
-94%
% difference
At Neyber we give your employees the flexibility to choose between
saving more on total interest costs or spreading repayments over a
longer period of time, depending on their individual circumstances.
Note:
(1)  Minimum monthly payment is defined as the maximum of either 1% of current balance + interest or £25
(2)  For credit card debt the minimum payment amount may reduce as repayments are made to the outstanding balance..
(3)  Credit card interest rate of 29% represents average rate across current Neyber debt consolidation customers
(4)  Existing debt is composed of a 50% split between credit card and unsecured fixed term credit (over 5 years)
(5)  Loan size is based on an average of our portfolio of debt consolidation customers
(6)  Average UK salary of £26,500 used to calculate pay rise across all loans which is reflective of current debt consolidation customers
(7)  Representative example APR is 4.9%. APR based on current customer base. Typical example: amount of credit £7,000. Term: 3
years. Interest: £529.30. Administrative fees £0. Monthly payment of £209.15. Total repayment £7,529.30. The rate you are offered
will depend on your individual circumstances.
(8)  All figures have been rounded to the nearest whole number
| *All figures quoted are based on existing Neyber customer base, as at May 2016
True debt consolidation
Consolidate all your existing debt
At Neyber, we aim to solve all your employees debt problems, and
that’s why we lend up to £25,000. This allows your employees to
consolidate all their outstanding debt so that they can be debt free at
the end of their loan term.
Our average loan size is £10,000. In the example, an employee
borrowing this amount to consolidate their debt would benefit from a
reduction in monthly repayments of 36%.
In contrast, if we were only able to lend up to £5,000 (approx. 20% of
UK average salary) the total rate would only reduce to 23.7%APR and
monthly repayments would still increase. This results in an increase in
monthly debt repayments by 25%, making employees worse off.
In summary, partial consolidation leaves employees vulnerable to the
negative effects of debt extension as opposed to the benefits of debt
consolidation.
This presentation is commercially sensitive
| *All figures quoted are based on existing Neyber customer base, as at May 2016
Example loan comparison:
Existing
Debt
Neyber Loan
5 years
Comparable Loan
2 years
Amount
£10,000
£10,000
£5,000
% of existing debt
consolidated
100%
50%
Existing debt remaining
£0
£5,000
Example APR
29.0%
6.9%
7.9%
Debt repayment period
20 years
5 years
20 years
6.9%
23.7%
After Consolidation…
Total Rate
Total monthly repayment
£306
£197
£383
Difference in repayment
-£109
£77
-36%
+25%
% difference
Note:
(1)  Minimum monthly payment is defined as the maximum of either 1% of current balance + interest or £25
(2)  For credit card debt the minimum payment amount may reduce as repayments are made to the outstanding balance..
(3)  Credit card interest rate of 29% represents average rate across current Neyber debt consolidation customers
(4)  Existing debt is composed of a 50% split between credit card and unsecured fixed term credit (over 5 years)
(5)  Loan size is based on an average of our portfolio of debt consolidation customers
(6)  Average UK salary of £26,500 used to calculate pay rise across all loans which is reflective of current debt consolidation customers
(7)  Representative example APR is 4.9%. APR based on current customer base. Typical example: amount of credit £7,000. Term: 3
years. Interest: £529.30. Administrative fees £0. Monthly payment of £209.15. Total repayment £7,529.30. The rate you are offered
will depend on your individual circumstances.
(8)  All figures have been rounded to the nearest whole number
How does this lead to an
effective pay rise
An effective pay rise is achieved when an employee reduces their
monthly repayments by spreading repayments over a manageable
period at a low rate.
Reducing monthly repayments
Consolidating with a Neyber loan means less of an employees
monthly salary is needed to service their debt, and it is this which
equates to a pay rise.
The pay rise is calculated by dividing the annual amount saved in
repayments by the net annual salary.
This presentation is commercially sensitive
Reducing the total interest paid on debt also provides a reduction in
the overall cost of debt.
Lifetime savings
Employees can save money over the lifetime of their loan by reducing
the interest paid. They do this by repaying at a lower rate over a
shorter period of time, which also reduces their monthly repayments.
Total savings are calculated by subtracting the overall cost of the
current debt by the overall cost of the Neyber loan.
Employee benefits
The maths…
Reducing financial stress – ‘creating a happy workforce’
Every year businesses across the UK are impacted by employee
financial stress. Employees suffering from financial stress tend to have
more days off sick and are likely to be less productive when at work*.
Average # of employees
1,000
Neyber can save the average employee in excess of £11,000 over the
lifetime of their outstanding debt, thus reducing financial stress and
boosting productivity.
Average consolidation amount
£10,000
Lifetime savings per employee
£11,715
For example, a company with 1,000 employees, consolidating debts
with Neyber provides lifetime savings of £2.3M across the workforce.
Take-up rate
On average, this can increase the productivity of your workforce by
4%**.
Average workforce savings
Neyber provides a simple and effective solution to financial stress.
Creating a workforce that is happier, more knowledgeable and more
productive – without having to worry about making it to the end of the
month.
| ** Assuming uptake of 20%
|
*Based on Neyber’s ‘The DNA of Financial Wellbeing’ report, 2016
Increase in workforce productivity
20%
£2.3M
4%
Note:
(1)  Increase in workforce productivity is calculated as the cost of payroll (average salary * employees) * 20% (take-up) * 20% (loss in
productivity from financial stress)
(2)  Average workforce savings is calculated as lifetime savings per employee * take-up * employees
Neyber achievements to date
We’ve invested a significant amount of time and effort developing a
solution that meets the objectives of employers, while serving the
needs of their employees.
Our loan book
We’ve lent to over 2,500 people across the UK. Our average loan size
is £10,000 over an average term of more than 4 years.
With over £25m lent to date, we’ve created a solution that helps
people be £101 better off every month, on average, when
consolidating debt.
We’ve successfully consolidated the debts of our customers and most
importantly, we have reduced monthly debt repayments by over 20%
to deliver an effective 5% pay rise to employees - at no cost or risk to
the employer.
Our solution is a true debt consolidation loan that allows employees
to:
Lower monthly debt repayments by spreading repayments over a
longer term at a low rate
We don't rely on third parties and have developed our own
underwriting and customer service operation to ensure that the
products we develop meet the needs of employers and employees.
Consolidate ALL of their existing debt into one simple, more
manageable and affordable loan
We have designed three simple rates*, that can give as many of your
employees access to fair finance as possible.
|
All figures quoted are based on existing Neyber customer base, as at May 2016
|
*Three simple and fair interest rates include, Great (4.9% APR), Good (6.9% APR) and OK (9.9% APR)
Keep in touch
Monica Kalia
Chief of Strategy and
Business Development
Brendan Kelley
Head of Partnerships –
Financial Wellbeing Team
Heidi Allan
Head of Insights and
Engagement
T +44 (0) 203 770 9402
M +44 (0) 79 7146 4909
E [email protected]
T +44 (0) 203 770 9438
M +44 (0) 78 8751 3253
E [email protected]
T +44 (0) 203 709 440
M +44 (0) 78 8446 3336
E [email protected]
Copyright 2016 Neyber - All Rights reserved
Neyber Ltd is authorised and regulated by the Financial Conduct Authority. Interim permission:663054; Registered address Liberty House, 222 Regent Street, London, W1B 5TR; Company registered number: 08806631; Data Protection
Registration Number: ZA39009
Neyber intends to offer customers a range of investment options for regular, salary deducted contributions to their investments portfolio with access to a range of higher return investment/lending products including tax efficient ISAs. Such
products will not be eligible for the Financial Services Compensation Scheme.
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