Within the online market for borrowing a small sum of money, known often as the payday loan market place, there are several different ways of borrowing and furthermore, several different types of lenders. Nowadays customers have the ability to borrow flexible amounts, usually ranging in value between £50.00 and £500.00 and then have a choice of different repayment terms. The repayment terms usually range from a single month and then if needed can be split over 2, 3 or 4 months and so on accordingly. The two different types of lender who exist are known as the direct lenders and then the loan brokers and both serve a purpose in the market depending on the service required by the individual applicant. Over the years since online loans of this nature were introduced the market has changed and adapted quite considerably.
Early days saw a less flexible resource for borrowing and mostly comprised of a very specific product format. This format was the very well-known payday loan which allowed customers the simple ability to borrow until their next employment pay date. Those who could not repay the full sum due on the agreed date were subject to increased costs and also charges. That said, the original product was reflective of consumer borrowing habits at the time and these particular loans served a void in short term consumer borrowing. It is as the years have passed and lenders have developed and worked upon understanding their customers better that vast improvements have been made by both the direct lenders and the other providers, the loan brokers. In the current day market place both the direct lenders and the brokers are managed and therefore governed by the Financial Conduct Authority and this means they must practice within a specific set of rules and guidelines. This makes for a more stable and trust-worthy consumer market as there is much better consistency across the board. Direct lenders offer customer the service of being considered for a loan directly and therefore ‘in-house’ and this means the lender with whom the application is completed, is the same lender who will deliver a final decision as to the outcome of the applications status. Typically given direct lenders operate in-house, they do not charge a fee for the service which is provided; meaning whether the application is successful or not, the lender will not charge the customer a fee for doing so. Loan brokers operate differently to direct lenders even though they exist in the same market space. Brokers will perform a service whereby they will take the applicants details and then attempt to find a suitable lender for them based on these. In some respects a broker operates like a comparison site and can assist in locating a potential lender. A broker does not therefore deliver the final decision as to the success of an application and instead this will be done by the lender should the applicant go on to apply fully with the proposal. Brokers usually charge a fee for this service.
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If anyone is ever looking to take out finance regardless of the reasons, they will have a number of different things to consider before any application can then be made. They must do this on every single occasion when looking to borrow money of any kind. First of all they must know that the finance is definitely one hundred percent needed in the first place and then if so only a realistic loan amount should then be looked into further. Any amount if obtained must be affordable for that person so the debt can definitely then be repaid. The actual type of finance can then be chosen and here there can be a different set of options to some potential borrowers. For example same day loans whether they be short term or installment loans. Then as well as considering the type of borrowing someone likes the actual lender can then be chosen and here again there could be different options. Some lenders out there are better in what they offer to people so always bare that in mind. Once that has been considered then and only then should a person look to apply for the finance.
I think it will always be fair to say that when someone is needing to borrow money they will want that cash quickly. They will want the money at their disposal as soon as possible so they can then put the cash to use and use it as required. Here a high number of different lenders will aim to offer same day loans to make that happen. In the same way borrowing money from friends and family can make this happen and this will always be a common way to borrow money, more so if only a small amount of money is required. Take this as an example, someone all of a sudden received an unexpected bill for perhaps their car. They will need money quickly to make that repayment as required so same day loans can then be urgently needed. If a small cash loan is required then perhaps family and friends can help or there can be other lenders out there. Some of course will charge interest on any amount that is borrowed so bare that in mind. Now borrowing money this way is nice not only because you can get money from friends and family quickly but you will nearly always avoid paying any interest on the loan if it is granted. Any amount borrowed is the only amount you will then have to repay. That is always a possible option however, if this is then the case lenders will have to be approved and they will charge interest on amount that is granted. There are so many different lenders so bare that in mind as some out there in the financial market place will clearly be better than others in what they offer. Most of them will be able to offer same day loans if that is what someone is looking for. There can always be a high number of different people who when it comes to borrowing money if they need to do not actually know what could be available to them. Because of the fact that they don’t know what kind of finances could be available to them they can rush into finance and not take out a financial product that is suitable to them. No one should ever do this nor should a person ever just take out the first piece of finance that comes along to them. From the financial market place these days’ people can look to obtain both short term loans and instalment loans if a loan like product is required. It can be common with the latter loan more can be potentially obtained for repayment then due back over a longer period of time. Credit cards are then also a common way to borrow money as these of course allow people the chance to pay for different items as well as withdraw cash on credit up to a set limit. Below in this article is more information regarding direct lenders who may be able to help people obtain finance if they have poor credit.
There can be a high number of different borrowers who are looking to borrow money and this can certainly be down to a number of different reasons. There could be some people who may need a large amount of money as they are looking to make some form of expensive purchase e.g. a new car perhaps. Others may just need some financial assistance to pay a bill so then in those cases only a small cash loan could be needed. Now if this potential borrower has a low credit score and bad credit in their past they will often find that obtaining finance can be hard. Not only is it hard to get the applications through direct lenders accepted they can also see that a number of their borrowing options available (probably only a limited amount will be available) are very expensive. Some direct lenders can having said that help these people. People with bad credit do have borrowing options providing their credit is not really bad, some lenders will focus more on recent borrowing activities as oppose to potential old defaults they may have. Some financial lenders having said that will base their lending criteria around a set credit score and if this is not met then the chances are that person will be declined. Regardless of the debt being old, having a low credit score really can make obtaining finance for the future hard. It is always worthwhile repaying debts when they become due. I have found that payday loans and a range of other short term loans are the more common ways for people to borrow credit when they need to despite having limited alternative options. Lending to such people will be risky for finance lenders so some of these finance types can work out to be expensive. It will always be worth therefore baring this in mind. When it comes to ever borrow money there can always be a number of different people who do not actually know just what options they have. It is now certainly fair to say that the only way of borrowing is through your local banking branch and the manager there has now well and truly gone. Some people can often have a selection of different finance types to choose from and this is why no one should ever rush into applying for finance. From the financial market place these days’ people can often look to obtain both short term loans and instalment loans when a loan is required. This way people can often look to borrow a selection of different loan amounts for repayments then due back over a number of different repayment terms. Credit cards are also another common way that people use to borrow money and these allow people the chance to pay for different items as well as withdraw cash on credit via a set credit limit. People so this by the actual use of that card itself. In the article below I am going to focus more on short term loan borrowing and in particular payday loans.
Although payday loans are not as common as they once were, I still find a high number of people use this borrowing option when they need cash. These loans can often be a way to borrow amounts up to £500.00. They are designed to help people in a cash emergency and they can give people cash when it is needed quickly. Never should payday loans ever be used as a long term borrowing option. Once this finance is obtained from a lender, the customer will then be required to pay back that debt just as soon as they are paid again from their employer. Hence the term payday loan. By many this way of borrowing can often be seen as a very expensive way to take out finance for a very short period of time. This loan is expensive there is no denying it and from the financial market place there will be cheaper options. It can be common that this chosen way of borrowing is mainly done so by people who have bad credit. People who have taken out finance in the past and then not repaid the debt can often find their borrowing options then somewhat limited but they could still find payday loans. This can be useful if other ways to obtain cash are restricted. The direct payday lenders who mainly offer this product to borrowers will actually aim their finance types at people who have been rejected for other types of finance elsewhere. If the same borrowers were to look to get the money from typical high street lenders such as major banks they will most likely be declined however direct payday lenders could then be a realistic borrowing option. The fact that people with bad credit mainly take out payday loans is one of the main reasons why this way of borrowing money can be expensive. For those of us wanting to obtain a payday loan there is an online application process to be completed. Payday loans are available online in a range of different formats and are known for their easy to follow and discreet application process. Payday loans can be useful to consumers when only a small amount of money is needed to be borrowed and an equally short period of repayment is required. Normally payday loans consider applications in the value of £50.00 to £300.00 but there are lenders who will consider applications which are up to £1000.00. The terms of repayment although generally deemed as short, are flexible with most lenders offering a selection of different repayment options for each loan amount applied for. Again typically the periods of repayment offered range from 1 to 6 months but for those consumers requiring a higher loan value there may be longer periods of repayment to choose from, stretching up to a 12 month repayment period.
In the vast majority of cases payday loans lenders will ask that the application process is fully completed via an online application form. Nowadays many lenders have developed decisioning capabilities which mean they do not always need to speak to the applicant in order to decide if a loan is suitable or not. This is not to say the checks completed by payday loans lenders are not comprehensive because they are and in actual fact these checks can help the lender make decisions without the need to speak to the applicant directly. In order for the checks required to be performed by the lender the application and the information it gathers is key. The design of the application is normally clear and easy to follow so as customers we can be confident in our choice of not only product but also provider. Behind the scenes of the application the lender will be using the information gathered to verify the applicant’s identity, credit worthiness, employment status and ability to afford the loan requested. Lenders will in almost all cases ask that the applicant to supply a mobile number for verification as part of applying as well as an email address. The email address will not only be used to keep the customer up to date on the progress of the loan but also to provide important loan based documentation. In cases where applications are successful and this will only be in instances where the lender can be completely satisfied the loan is sensible and affordable, the requested funds will normally arrive in the agreed bank account the same day. Payday loans lenders do not prioritise ‘speed’ as a requirement in the application process but equally understand that the time to apply must be reflective of the overall product. Some lenders may require additional documentation as part of the application process and if this is requested it is unlikely that the application will progress until the requested information is supplied by the individual. However this does not mean in all cases this will be true. Over the years the way in which consumers have used payday loans has changed. In more recent years the borrowing behaviours of consumers have shifted to favour the more flexible and instalment based payday loans. This shift has taken many years and it is only within this recent time frame that lenders have begun to move away from more classic forms of payday borrowing and instead expanded their product offering to include that of instalment based payday loans. The payday loans market is not alone in its change in terms of how customer behave and expect to be able to repay and in reality, many consumer market places have shifted over the last 5 years.
Nowadays it appears common-place that consumers will turn to a variety of credit based facilities in times when the required funds are not readily available. Although credit has always been available, traditionally speaking consumers only used credit when a considerable financial resource was needed. This could have been a home improvement for example or the purchase of a new car. Effectively credit was used when larger scale purchases needed to be made and then repayments managed effectively over an agreed period of repayment. As time has passed the use of credit has become more common place as the general availability of it has steadily increased. In the last decade we have seen a whole host of new credit resources not least payday loans. Along with payday loans there are now store cards, catalogue based credit agreements as well as credit cards available for varying sums. What this means is that consumers have become better able to manage their finances via the means of credit and the monthly commitments they demand. Like so many forms of credit, payday loans are only really ever useful to consumers when they are used in the correct and intended manner. Payday loans were never designed to offer continuous and on-going financial support to consumers and instead remain to serve consumers who experience a short term financial need. In simple terms this means payday loans are best suited to times when an unexpected or unplanned cost presents itself. Equally this cost should not be large in nature and instead unlikely to occur month in and month out. This means where a payday loan may be suitable for a car repair or broken home appliance, it would not be suitable for a new car purchase. Using the ‘correct’ financial resource for the financial need is very important in determining whether that resource is realistic and affordable. When consumers agree to credit without the required consideration as to whether the resource and its repayments are truly affordable, this can of course lead to financial difficulties down the line. Payday loans like so many other credit based facilities, are offered in a range of different terms and loan amounts and therefore there is flexibility and choice to help assist in making sensible and considered borrowing choices within this online based market place. When consider a form of short term borrowing there are several different ways in which repayment can be made. In terms of payday loans the modern day lenders offer loans which are specifically designed to offer choice and selection to their potential customers. The lenders in existence want to ensure that through flexibility the realistic needs of consumers can be met whilst ensuring a resource which is realistic to each individual’s needs. The way in which this is achieved is through an extensive application form and a range of repayment terms. Today we will be looking at payday loans in a bit more detail so as to understand what can be achieved should a small loan be required.
Payday loans lenders will use a range of different requirements when determining whether or not a loan application can be granted or not and the information for this will come from the application form completed by the applicant. Although the checks completed are detailed, in fact, the actual application takes little longer than 10 minutes to complete. The application is usually completely online based and as such most lenders have websites which can be accessed on any form of internet enabled device; whether that be a mobile phone, laptop or tablet. It is the aim of payday loans lenders to gather all the information required to make an informed decision whilst maintaining a clean and simple to follow application process. Once submitted the lender will use the information contained in the application, such as personal details, employment based information and banking details to make a researched decision as to the suitability of the loan requested. The checks themselves are often completed via the means of both electronic and manual checks, meaning they can be completed in a timely manner. Where the likes of identity and credit worthiness may initially be assessed electronically, later in the application process this information may be reviewed manually. To ensure that payday loans are able to meet the needs of individuals they are delivered mostly in an instalment format and this means the applicant can apply for a range of different repayment terms. These terms are usually reflective of the amount being applied for and will depend also on what is affordable to the applicant. Where there are still payday loans which can be repaid in a single instalment, there are also options for repayment over a longer period of time. This could mean repayments of 3 months, 5 months or 6 months as an example. The lender will be able to make recommendations as to suitable repayment terms not solely based on the amount being considered as a loan but also as a reflection of all the information they have gathered during the application. This means where a loan of a certain amount will be suitable for one individual it may not be suitable for someone else in a different financial situation. Lenders of payday loans will do all they can to ensure sensible and affordable lending decisions are made. |
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December 2016
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