The UK market for personal loans has just become even more crowded: Asda Money has teamed up with lending platform Freedom Finance to launch Asda Personal Loans.

Major UK supermarkets have been selling personal loans for years. Loans from Sainsburys and Tesco have regularly appeared towards the top of the personal finance comparison websites.

But until now, Asda has stuck to offering credit and prepaid cards, insurance and since April this year, a money transfer service.

Asda will use Freedom Finance’s financial technology platform to search a panel of trusted lenders, the first time that a UK retailer has partnered with a panel-based broker.

Brian Brodie, chief executive of Freedom Finance, said: “It widens the market space for Asda Money, who will now be able to say yes to more customers”.

“It is our mission to help as many customers as possible secure the funding needed to realise their dreams and ensure we deliver on our promise of great customer outcomes. This joint venture will significantly increase the number of personal loan approvals that Asda Money will be able to provide to its 19 million-strong customer base.”

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Katie Walley, head of Asda Money added: “Our strong belief and analysis of the current market was that a new and different approach to personal loans was desperately needed to better fit the needs of our customers and consumers who are often turned down or offered a rate that doesn’t suit them.

“Unlike other high street lenders, we will consult with a panel of trusted lenders through Freedom Finance to ensure we offer customers the best loan for their circumstances and rest assured thanks to the soft search technology, there’s no effect on customer’s credit rating – something we don’t feel is fair.”

Asda has received a favourable press for its travel money services, offering  0% commission, free click & collect services, next day home delivery, and buyback offers.

Its remittances service launched in April offers money transfer to over 145 countries through a network of more than 317,000 locations across the world.

Upon its launch, Walley said:”We will constantly benchmark our prices against the largest money transfer providers. That not only makes us better value, but also makes sure more of customer’s money goes to their recipient and less goes on fees.”

Asda’s credit card offering dates back to 2012; at the time it launched an aggressive rebrand of its money division and seemed set fare to target Tesco, Sainsbury’s and Marks and Spencer’s banking units.

In the US, Asda’s parent Walmart has made two high profile attempts to enter mainstream retail banking.  It has entered the retail banking sector in Canada and Mexico having been rebuffed in the US.

It has however been successful in the US with its Walmart MoneyCard MasterCard issued by Green Dot Bank.

Back in the UK, credit cards make up around 60% of  total unsecured credit market, with personal loans, car finance and overdrafts contributing to the majority of personal unsecured debt.

In terms of the source of unsecured lending, the value of non-bank lending has doubled in size since 2011.

Figures from PwC show that unsecured debt has reached an all-time high in the UK, standing at £10,000 per household.

Concern about record debt levels led the Bank of England-run Prudential Regulation Authority (PRA) to tell lenders in July to demonstrate that they are properly managing their risks.

The PRA’s review of the consumer credit market found that lower pricing, falling risk-weights, and increased lending to higher-risk consumers are contributing to heightened vulnerability.

Asda may be banking on the major UK retail banks taking a more conservative approach towards unsecured lending. In particular, Asda may expect to grow its lending book by targeting the near-prime segment, considered by many analysts to be underserved by the mainstream providers.