When considering short term loans, the good news is that there are lots of different repayment options which are available. Over the years short term loans have become increasingly more flexible which means that should you require one, the options available for repayment are varied thanks to a good selection of different terms. Short term loans have had to come a long way to their current form since when they were first made available over a decade ago. The original product was far less flexible and did not offer the same level of choice as seen in today’s market place. Today we will be exploring how short term loans and the repayment terms offered have changed over the years.
The first type of borrowing resource offered by the short term loans lenders was one of a simple nature. Commonly, this product was known as the payday loan. The payday loan was designed to introduce consumers to not only small sums of borrowing but also; online borrowing. The vast majority of payday loans were therefore offered by the means of an online based application process. This meant that like never before consumers could apply and potentially be approved for a small loan without the need to directly communicate with the provider, whether this be in person or over the phone. The application forms, much like the product itself, were simple and easy to follow. Many payday loan customers could apply for a loan of their choosing and if approved, receive the loan in their bank account the very same day.
The payday loan worked on the understanding that the loan repayment term would never be any longer than that of the applicants next employment pay date. Meaning when applying the customer would confirm their next pay date as the date in which repayment would be made. So this meant that the total term of the loan was, in the majority of cases, very short. Some loan terms would be as little as only 5 days, with others being no longer than 35 days. Upon arrival of the agreed date, the customer would then repay the loan and the interest charged by the short term loans lender for the period of borrowing, as a single and one-off repayment.
Although consumers were clearly drawn to the fundamentals of the resource and therefore the ability to borrow a small sum of money, what also became clear was that the manner in which repayments were made was far too limited. This is why over the years short term loans have had to adapt and become more flexible to the true repayment needs of consumers. The end result; instalment based borrowing. This means that nowadays consumers have the ability to repay over a number of pre-agreed months if they wish to do so, instead of having to repay the loan as a one-off and potentially large repayment amount. Instalment based borrowing allows choice and with that, gives the ability for consumers to make an informed borrowing decision.