Amigo Loans, established in 2005 by James Benamor, emerged as a prominent UK-based financial institution specializing in guarantor loans. These loans were designed to assist individuals with limited or poor credit histories by allowing them to borrow funds, provided they had a guarantor—typically a friend or family member—who would assume responsibility for repayments if the borrower defaulted. The company offered loans up to £10,000 with an Annual Percentage Rate (APR) of 49.9%, positioning itself between traditional bank loans and high-cost payday lenders.
In its early years, Amigo Loans experienced significant growth, capturing approximately 88% of the UK’s guarantor loan market. However, the company faced increasing scrutiny over its lending practices, particularly concerning the adequacy of affordability assessments. In July 2020, Amigo allocated at least £35 million to address consumer complaints related to insufficient affordability checks.
The challenges escalated when, in March 2020, Amigo ceased lending operations, citing the emerging COVID-19 pandemic and reassessing its risk appetite. Although a minimal amount of lending continued for key workers until November 2020, the company faced mounting financial difficulties. In March 2023, after unsuccessful attempts to raise additional capital, Amigo announced plans to halt all lending activities and initiate an orderly wind-down of its business over approximately 12 months.
For existing customers, Amigo has advised that all outstanding loans remain subject to the original payment terms, and borrowers should continue making payments as agreed. Customers experiencing difficulties are encouraged to contact Amigo directly to discuss potential support options.
The rise and fall of Amigo Loans underscore the importance of responsible lending practices and the need for thorough affordability assessments to protect consumers, especially those in vulnerable financial situations.
