When considering short term loans and the repayment terms they have to offer, thankfully there is a good selection of choice which exist. Short term loans are also known as payday loans and online loans and more recently; instalment loans. All of these names cover the resource officially defined as ‘short term and high cost’ borrowing. These loans are different to borrowing which is considered as mainstream because of the sums of money being lent and the terms of repayment being offered. Whereas a bank loan may be repaid over a number of years, short term loans are instead repaid over a much shorter period of time. Equally when looking at the same example of a bank loan, the loan sums being considered are generally large in value, ranging up into the tens of thousands, with these online loans the average loan value is around £300.00. So clearly there is a big difference between the short term loans and the more traditional and longer term lending options which also exist. As consumers therefore we need to be aware of this and select these resources with care.
A short term loan may be a great tool for those of us who experience a cost which was not planned. Whereas the likes of our rent and car insurance needs to be paid for each and every month, an emergency dental treatment is a little more difficult to plan for in advance. Instead, when an emergency cost presents itself it may be that the loans we are discussing here today, are a useful resource to consider. For those of us who prefer to repay borrowing by way of monthly instalments, the newest addition to short term borrowing is likely a good choice. Instalment loans are quickly becoming the preferred choice because of their flexibility in terms of repayment. Whereas for many years a loan of this nature meant agreeing to repay the amount due as a one-off repayment, nowadays lenders have more flexible and therefore customer friendly options available. Instalment loans come in a variety of different term terms, allowing borrowing over anything from 2 months up to 12 months in some cases. This means we have the ability to better plan for the cost of repayment for such loans, should the resource be needed for an unexpected cost.
It would seem that as a collective we are becoming increasingly drawn to borrowing which allows a number of repayments to be made, instead of a single and sizable repayment. Whether this be via a credit card, store card or these short term loans as discussed here today, the option to repay in smaller and therefore more manageable ‘chucks’ seems to be key. Like with any form of borrowing however, it is important when considering short term loans that we do so with our own individual circumstances in mind. This means reviewing the options available in a sensible manner and then making an informed borrowing decision.
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.
I can never stress at just how important it is for people to repay their debts once they borrowed it. Missing loan repayments for any person will nearly always result in severe negative consequences for anyone involved and this is something most people will always be keen to avoid. It certainly does not matter whether short term loans or borrowed from direct payday lenders or whether instalment loans are taken out from high street lenders, the debts must be repaid as agreed. Credit cards, mail orders the ways to borrow money can seem endless but they must all be repaid. There can be things that can occur when repayments are not made and these are explained in more detail below.
When repayments are missed to direct payday lenders that person who is behind will be chased for this debt. The lender will have the right to frequently attempt to contact that person to pursue the money that is owed. They will have then the access to contact that person on all the numbers they have available for that person. This will most likely be the home number, the mobile as well as the work number. For most people being contacted for a debt when someone is clearly struggling financially can be tough and at times it can also be embarrassing. If someone is contacted on the home and work numbers also it could lead to a third party finding out about the debt which can result in further embarrassment.
If a repayment is missed to any lender then that person could have their credit file negatively affected. This can lead to that person in the future finding it harder to get finance approved. Or even when they are accepted it can often be very expensive and it can cost more than it would do for the average or decent borrower. Direct payday lenders have the right when repayments are missed to report the fact to various credit reference agencies so other lenders can see what has happened. They will do this when a debt has been overdue for a certain period of time of normally over a month. This will then in turn make it harder for that person to get finance and their credit score will then be lowered.
When any account is overdue the balance will increase and their can often be interest and charges added by the lender accordingly. This can lead to the balance increasing at a rapid rate which again can be stressful to any borrower. That borrower at some stage may then be in a position to repay this debt but because it has increased so much they can only do so at a more expensive rate. In some cases they may not now be able to repay the loan because it is too expensive. Some direct payday lenders can only offer expensive borrowing products and these charge high interest on any amount borrowed. When they are overdue they can then be really tough to repay.
There can always come a time when a person needs money and most likely this can be down to so many different reasons. There can be some people for instance who may just need a small amount of money, they could just need some extra cash just to help make their salary last until they are next paid from their employer or they could just need some financial assistance to pay a bill perhaps. There can then be others who may need large cash loans as they are looking to make some form of expensive purchase. This could possibly be for a new car perhaps or maybe someone is looking to put money towards home improvements etc. Now regardless of what anyone ever needs money for, if they have this saved away they can then look to use this as required to then pay for whatever they need. Some people may then have enough saved to pay for their requirement and need outright or at least they can put money towards what they want. Turning to savings is always nice when this is a valid option however it is not always available and if this is then the case then people may need to then borrow the money.
When it does come eventually time for someone to borrow money and most people at some stage in their lives will have to do this there can be a high number of different options. Cash loans for example are just one way of borrowing money. This is mostly done through people taking out short term loans through payday lenders. This amounts to people borrowing usually up to £500.00 but sometimes more for people to then repay back the debt over a repayment term that suits them. This is a common way to borrow money for a wide range of different customers. These quick cash loans are designed to help people as the name would suggest over short time frames. Never should they therefore ever be used as a long term borrowing solution. People here usually take out the loans for amounts from £100.00 up to £500.00 or as mentioned before people can sometimes borrow more but this will be on the lenders discretion.
When most people so aim to borrow loans the chances are they will want their cash quickly. The chances are any borrower will want to have their loan disposable as soon as possible so they can put it to use and for what they want. Here cash loans and other short term loans can help. People can often look to apply for these online or over the phone in a quick and simple process that should only take minutes to then complete. If that same application is then approved from the lender that person can often look to receive the loan that very same day. In fact in some cases people can look to receive the loan within just minutes after they have been approved. People can honestly get cash that quickly through payday lenders when it is needed. The speed in which loans like this can be funded is probably the best thing as to what they offer.
When it comes to payday loan lenders and the product they offer, many of us still believe the options are limited. The reality is however that a lot of change has taken place over the last couple of years and today the loans and lenders who offer them are a completely different resource to what was once offered. Nowadays payday loan lenders operate to offer flexibility and choice to customers who are looking to borrow a small sum of money. It would be true to say that for a long time the offerings of this online market were limited and as such really only ever allowed a very specific type of borrowing, which is where in fact, the common belief of inflexibility stems from. Thankfully changes to the regulating body responsible for payday loan lenders and continued poor customer satisfaction has meant that the whole market and its lenders has had to transform in order to survive. Today we will be looking at these lenders and the product they now offer, to understand better what has really changed.
As many of us will be aware the original product offering from these lenders was the classic payday loan. Payday loans allowed customers to borrow until the date on which their next pay date fell. This meant usually borrowing for only a few weeks but at the most a month; depending on exactly when the application was submitted. As such the payday loan was a resource which saw consumers borrow small sums of money and if approved, repay the loan and the interest charged by the lender within a short period of time and as a lump sum repayment. Although simple in their approach and easy to understand, what was clear is that for many the payday loan and the repayments they required was for many not an ideally suited way of borrowing.
In order to better meet the needs of customer’s payday loan lenders needed to introduce a new way of lending which was not so restricted and furthermore, allowed more manageable repayments to be made. This fact was truly highlighted when the new governing body; the Financial Conduct Authority, took over responsibility for the market as a whole a few years ago. Through extensive research of how lenders once operated the FCA was able to identify where improvements needed to be made and how the payday loan lenders could improve what they did on a fundamental level. The result of this was instalment based borrowing. Instalment loans now all but replace the old style of borrowing and in doing so offer customers better ways of borrowing small sums of money. Instalment loans mean that customers have a better ability to repay the small sums borrowed because the repayments can be spread over a number of pre-agreed months. Depending on the lender and the specifics of what they offer, this could mean repayments over 3, 5 or 6 months for example.
Payday loan lenders have been in operation for long enough now that the vast majority of us will already know what this online borrowing market is all about. When these lenders first came along they gave a brand new access to borrowing which had quite simply never been seen before. The payday loan lenders were all about giving consumers the ability to borrow on a small scale and therefore offered a completely different lending resource compared to that of existing lenders such as high street banks and credit card facilities. Instead, these online loans gave consumers the ability to take borrowing into their own hands in many respects and this was thanks to the online and therefore discreet nature of applying offered.
Given the small value of loans up for consideration, a customer could apply for a loan and expect to receive a decision very quickly and actually this mostly remains true in today’s market place. Certainly the application process has only ever become more streamlined thanks to better displays within the application and a greater level of understanding on the part of lenders to make effective and sensible lending decisions. The reality is that the last few years have seen the payday loan lenders and their products being utterly put through their paces by the newly appointed regulating body. This regulating body is the Financial Conduct Authority and it has been their task over the last few years to somewhat completely transform the market place as a whole.
What many of us may already realise it that for many of the years prior to the Financial Conduct Authority’s rule, the payday loan lenders had start to become an unpopular choice amongst consumers. This was not to say that consumers did not continue to turn to the loans because in fact they did but there was certainly a general feeling that the loans were no longer effective. The problem was there was not a suitable alternative available and instead consumers had little option but to continue to return to the market and the limited product selection which was on offer at the time.
All of this boils down to the fact that for many years payday loan lenders offered a product which was limited in repayment options and this product was the original payday loan. When approved for such loans a customer would also then agree to repay the entire balance as a one-off repayment on their next employment pay date which of course meant a sizable one-off repayment. What the Financial Conduct Authority concluded, amongst other things, was that the loans on offer needed to be more flexible. As such the modern day payday loan lenders, who are fully regulated by the Financial Conduct Authority, offer loans with more flexible repayment terms and this is thanks to the addition of instalment based borrowing. This means instead of agreeing to repay the loan in a lump sum, customers are given the option to repay via the means of monthly based instalments; agreed at the point of obtaining the loan.
There can always be times when someone is in need of money and this can certainly be down to a whole host of different reasons. There can be some people who could possibly need a large amount of money as they are looking to make some form of expensive purchase. This could possibly be for a new car perhaps or maybe someone is in need of money towards a new house etc. There can then in contrast be others who may only need a small amount of a small amount via cash loans. This could be just to pay an unexpected bill perhaps or maybe someone just needs some money to make their wages last until they are next paid again from their employer. Now regardless of what anyone needs any amount of money for, if they have some saved away they can use this as required. Some people may then even have enough put to one side to pay for their requirement outright or at least they can put some money towards it. Turning to savings is always nice when this is an option however it is not for everyone and if this is the case then the chances are people will have to borrow the cash.
When people want to borrow money the chances are they will want their money as quickly as possible. The chances are people will want to use the money at their disposal as soon as they can. Here cash loans can almost certainly help. The lenders who offer such a product can look to offer people the loans quickly when they are needed. People have the ability to apply for the loans online or sometimes over the phone in a quick and simple process that should only take a matter of minutes to complete. If that same application is then accepted by the lender that person would most likely be able to receive the cash loans that very same day as to when they applied in the first place. Some people after having the finance approved can receive the money within a matter of minutes. They can often get the money that quickly.
Getting the money quickly is important and cash loans and other short term loans can offer people the chance there. These are also often by many as a way to borrow money when you have bad credit. Short term finance such as payday loans are out there to help people with bad credit get finance when it is needed. People with the bad credit can often find it hard as well as expensive to get the finance accepted. If the same people were to apply to typical high street lenders such as major banks and building societies then most likely they will be declined. However, having said that some lenders out there aim to provide their financial products to these such people. Some bad credit loans because of this can often be an expensive way to borrow money so that is certainly something to keep in mind.
I can never even begin to stress enough at just how affordability is on finance. If someone is not able to afford finance then they will often miss the required repayments due on that debt. Missing loan and other debt repayments will nearly always result in severe negative consequences for that person involved and most people will always want to avoid this from ever happening. It does not matter if people are looking at short term cash loans, instalment loans or maybe credit cards they have to affordable in order for them to get obtained. Below is a couple of tips how to test whether finance is affordable and how some finances are more affordable and realistic to repay then others.
I have found that a good way I personally use to test if finance is affordable would be for anyone to locate on average what their disposable income. This is the amount left over after all the bills and other financial commitments have been paid. This amount can vary from month to month but it still can advise someone if cash loans are affordable. People locate the amount by adding up all their income for the month coming ahead, this can include items as such as work salary plus any benefits and credits due. Then from that total figure, the same person over the same time frame deducts all their expenditure. That in turn can include rent costs, any debts they may have as well as other more basic living costs such as food etc. Then the amount left afterwards is the disposable income. Now only if that amount is high then should the person know that finance is affordable. If it is not enough to cover what is required on debt then no one should even consider applying for the finance.
It is very common that some finance borrowing types are more affordable and realistic to pay than what others offer. This is certainly something for any borrower to then consider. Take short term loans as a borrowing example in particular payday loans. When a payday loan is obtained by someone it will be common that person will need to settle the debt just as soon as they are paid again from their employer. Hence the borrowing term payday loan. When these are obtained it is also unlikely there can be many other repayment options other than to clear the balance in one and through one instalment. Now for most borrowers repaying any loan in full as well as paying towards other financial commitments can be tough. This can sometimes make some of these loans tough and not affordable for them to repay. In contrast other loans even short term loans can allow people to borrow similar amounts to that of payday loans yet people here can spread the cost of the debt. People borrow a set amount and then repay in instalments until the debt is then repaid. This is more affordable and realistic for certain people to repay plus it gives flexibility within the borrowing and I always feel this is important.
Instant payday loans are a manner of borrowing a small sum of money over a pre-agreed short period of repayment. The principle behind these loans is to give discreet and quick access to a small borrowing resource without the need to complete reels of paperwork and a lengthy application process. This is why instant payday loans offer a completely different service to that of larger credit providers, such as a bank loan. Whereas for these larger suppliers, you would expect to have to complete a somewhat time consuming process of approval, in the instance of instant payday loans the process is more compact; given the sums of money being considered for lending. Generally speaking the loans being considered here are for sums ranging from £100.00 to £300.00 typically but some instant payday loans lenders do consider loans up to £500.00. The repayment terms offered are thankfully flexible which means there is a good selection of monthly instalments to choose from. Let’s today look at instant payday loans in more detail and in doing so understand what exactly we can expect from them.
As mentioned above instant payday loans aim to offer a fuss free service for borrowing only a small sum of money. This is primarily achieved via the means of an online application form. The application forms are designed to be clear and easy to follow and can usually be completed in as little as 10 minutes. Once the application is submitted it is common that lenders will deliver the decision as to the success of the application in as little as an hour but certainly the same working day. During the application steps the lender is aiming to gather all of the information needed to make an informed lending decision. Primarily lenders want to do this without asking for additional supporting documentation from the customer. There will be instances where instant payday loans lenders will have to ask for additional documentation and this will be to verify an area of the application process that could not be done automatically. There are many electronic checks that take place for these applications and the use of them makes intelligent and informed decisions concerning the outcome of the loan request.
Although named as instant payday loans the most important factor for these lenders is not that of speed and instead of making sensible and affordable lending decisions with the individual needs of applicants in mind. This means considering the applicant’s ability to repay the loan requested when compared to existing monthly commitments. This could mean rent, travel costs or of course, existing credit commitments for some customers. Lenders of these loans will continue to keep applicants up to date as to the progression of the application and usually do so via email. In instances where extra information is needed or as mentioned, further documentation, it is likely that lenders will email and also call to ensure the applicant is fully aware of the requirements needed to progress their application.
When considering the applications of customers, short term loans lenders will have the concept and application of ‘affordability’ are the heart of their approval process. There is increasing pressure on short term loans lenders and all lenders alike to ensure they grant loans only when it is truly suitable and affordable to the individual needs of the applicant in question. As such applying rules focused on affordability has become an ever increasing presence in the approval process of borrowing. In the case of short term loans this requirement came into full force when the Financial Conduct Authority took control of the market in its entirety a few years ago. Since their introduction, the FCA (common name for the Financial Conduct Authority) has helped lenders transform their approval procedures, product offering and ultimately level of customer service they provide. Through in-depth research as to how the market existed in its original form, the FCA was able to establish that too often lenders were not able to successful identify if the loan being requested was truly suitable and this was mostly attributed to the lack of affordability based assessments during the approval process. Today the short term loans market has been completely transformed in terms of both the product and service and as such, lenders are making smarter and better decisions concerning the outcome of their applications.
What the FCA fundamentally identified is that short term loans lenders were not providing enough flexibility in their product offering and therefore were often unable to often a form of borrowing which was considered affordable. Affordability in the context of the FCA and these loans means that the lender must ensure they have performed adequate checks to assess the suitability of the requested loan and furthermore, can conclude that the loan offered is affordable. Given the fact that at the time, many lenders were still offering a single repayment style of short term loan, it made making the loan affordable to the various individual needs of customers difficult to achieve. This combined with the fact that such lenders were not fully assessing the credit reference file information readily available, meant that in many instances loans were being granted which simply were not suitable.
Nowadays with affordability assessment at the heart of the application process for short term loans, lenders are better able to understand whether a new borrowing resource would be truly affordable. This is further reinforced by the fact that lenders are giving customers the ability to repay loans via the means of more flexible repayment terms. This is being delivered by the addition of instalment based short term loans. In fact, nowadays the vast majority of lenders who operate within this multi-million-pound market place, offer only instalment based borrowing. This means instead of only offering the ability to repay a proposed loans a one-off and sizable single repayment, lenders are presenting a number of different monthly based instalment loans, allowing consumers to be active in making a sensible and choice driven borrowing decision.