When applying for short term loans nowadays consumers will notice that the range of repayment options on offer is much more flexible than that of the offering of years gone by. Today the short term loans market is somewhat transformed compared to the original manner in which these loans were due for repayment. For many years the short term loans market was awash with a very specific type of borrowing; designed in the first instance to introduce consumers to a simple method for borrowing a small sum of money. Given the reality that before short term loans were available online, consumers had very limited options concerning small time borrowing, it was important that the introduction product to such borrowing was clear to follow and easy to understand. Ultimately the end result was that of the payday loan. The payday loan existed very successfully for many years and was used by many millions of consumers. The key problem with the payday loan was the simple fact that consumers outgrew the simplicity of the repayment structure on offer. Increasingly consumers in a general sense became adapted to credit, large or small in scale, being part of ‘every day’ life and as such wanted to have access to flexibility in the process. This flexibility is what the payday loan sorely lacked.
As consumers continued to accept and make use of all different forms of credit, monthly instalment repayments became increasingly popular. Thanks to the like of home lending, mail orders and credit cards, consumer spending habits evolved to be reflective of these new resources. Instead of saving month in and month out for the goods and services desired, the modern day consumer has become used to being able to access these things and then make monthly repayments towards them until repaid. When the payday loan was made available over a decade ago, access to credit in a general sense was not as vast and as such consumers had the means and capabilities to make lump sum repayments; as demanded by the payday loan. The payday loan was, as the name suggests, a resource which let customers borrow an agreed amount of money until their pay day. This meant agreeing to repay the total amount borrowed and the interest charged by the lender within a short period of time. Although at the time this resource was fitting of the needs of consumers, in today’s economy it has been demonstrated that this is no longer the case.
In order to continue to provide a consumer friendly and financially useful resource, the short term loans market has had to evolve and this means changing the manner in which repayments are requested. Nowadays the payday loan has, in the vast majority of cases, been completely replaced by instalment based borrowing. This simple but fundamental change within the sector has meant that once again short term loans are able to provide a flexible and useful consumer borrowing resource; capable of catering to the modern day needs of consumers.