If anyone is ever looking to borrow finance at any stage, that person will always have to consider a number of different things before they can then even think about applying for the finance. This must be done on every single occasion. First of all they must know that they definitely need to borrow the money in the first place and then if so they must always only select to borrow a realistic amount. Any amount if obtained must then be affordable for that person to manage and then repay the debt. Once this has all been looked into the person can then choose the type of finance and here they can often have a number of different options. If a loan is needed for instance then quick payday loans and other short term loans could be chosen. Or if potentially higher amounts of money is needed for longer periods of time then perhaps instalment loans can be looked into. Credit cards are another common way to borrow money for when it is available. In the article below I am going to focus more on quick payday loans and explain what these offer and also how they can work out to be expensive.
When people need to borrow any amount of money, they may not know exactly what could be available to apply for and then when possible obtained. It is then because of this that no one should ever rush into applying for loans or other borrowing and why they must always explore the different options available to them. In recent years it has become clear to me that more and more people are turning to quick payday loans and other short term loans for when they need finance. Quick payday loans are often out there supplied by payday lenders and they are aimed at people normally with bad credit. These people will often find it tough to get approved for finance or it can often work out to be an expensive borrowing option. Some of the quick payday loans available are therefore expensive. People often look to borrow amounts up to £500.00 or in some cases people can look to borrow slightly more and can then repay that debt back over a number of repayment terms suitable for them. With quick payday loans and other short term lending people are then required to repay the debts back over a repayment term that suits them however, it must be done over a maximum time frame of twelve months. Any loan that is repaid over longer than twelve months cannot be classed as that way of borrowing money. Unlike the traditional payday loan where an amount is borrowed and is then required to be settled in full just as soon as the person is paid again from their employer. With other short term loans people can then look to spread the debt albeit they are still repaid over quick durations. Always remember that with any finance the longer it takes to repay the debt the more overall repaid back in total.
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If anyone is ever looking to borrow finance at any stage, that person will always have to consider a number of different things before they can then even think about applying for the finance. This must be done on every single occasion. First of all they must know that they definitely need to borrow the money in the first place and then if so they must always only select to borrow a realistic amount. Any amount if obtained must then be affordable for that person to manage and then repay the debt. Once this has all been looked into the person can then choose the type of finance and here they can often have a number of different options. If a loan is needed for instance then quick payday loans and other short term loans could be chosen. Or if potentially higher amounts of money is needed for longer periods of time then perhaps instalment loans can be looked into. Credit cards are another common way to borrow money for when it is available. In the article below I am going to focus more on quick payday loans and explain what these offer and also how they can work out to be expensive.
When people need to borrow any amount of money, they may not know exactly what could be available to apply for and then when possible obtained. It is then because of this that no one should ever rush into applying for loans or other borrowing and why they must always explore the different options available to them. In recent years it has become clear to me that more and more people are turning to quick payday loans and other short term loans for when they need finance. Quick payday loans are often out there supplied by payday lenders and they are aimed at people normally with bad credit. These people will often find it tough to get approved for finance or it can often work out to be an expensive borrowing option. Some of the quick payday loans available are therefore expensive. People often look to borrow amounts up to £500.00 or in some cases people can look to borrow slightly more and can then repay that debt back over a number of repayment terms suitable for them. With quick payday loans and other short term lending people are then required to repay the debts back over a repayment term that suits them however, it must be done over a maximum time frame of twelve months. Any loan that is repaid over longer than twelve months cannot be classed as that way of borrowing money. Unlike the traditional payday loan where an amount is borrowed and is then required to be settled in full just as soon as the person is paid again from their employer. With other short term loans people can then look to spread the debt albeit they are still repaid over quick durations. Always remember that with any finance the longer it takes to repay the debt the more overall repaid back in total. In recent year’s short term loans have come under increasing pressure from regulators to improve both their product and service being offered to customers. Short term loans are also known as payday loans and instalment loans and are usually accessible via the completion of an online based application form. These loans have actually now been available via these means for more than a decade and as such have established themselves as an often used consumer borrowing tool. Over the years many millions of consumers have turned to short term loans when they have had a requirement to borrow a small sum of money arise. These loans are usually offered as either one-off repayments or via the means of monthly instalments, with loan values which range from £100.00 to £300.00 normally and in some cases, loan values are offered up to £1000.00. Over the years the market has certainly experienced ups and downs as far as customer satisfaction is concerned, with the resource itself being called into question over the years. With this in mind it is not surprising then that in recent years the market has had to answer to the demands of a newly appointed regulating body; the Financial Conduct Authority.
The Financial Conduct Authority was introduced as the regulator of short term loans in an effort to bring this vast online consumer borrowing resource into line. For many years many lenders existed within this market and it was felt they had in many ways lost sight of how to effectively serve the needs of short term borrowers. In the early days of the market the products on offer were hailed as much needed and able to fill the gap in terms of the gap between small time borrowing and larger borrowing offered by long established borrowing facilities. The loans on offer enabled consumers to borrow on a small scale; something which had not been readily available before and the result was that consumers were welcoming of such an option. Over the years though it became clear that although the need for short term borrowing was very much present, the manner in which short term loans lenders operated was not ideal. In order to understand this further the FCA conducted a complete review of the market and exactly how it had come to serve short term borrowers. The result of this research was clear; short term loans lenders were not considering their applicants ability to repay the loans being granted in an effective manner. In more simple terms this meant that lenders were not fully considering affordability. The application of affordability; meaning to fully understand an applicants true ability to afford a form of borrowing, is just as important in short term borrowing as it is for any other form of borrowing. In order to ensure going forward short term loans lenders recognised this fact the FCA made a number of key changes. These changes were applied to lenders via new rules and regulations and therefore better guidance to lenders who truly wished to support the needs of short term borrowers. Quick payday loans are a means of borrowing a small sum of money. Thanks to a vast selection of lenders, the options available actually come in a range of different shapes and sizes. This means whether you are looking to borrow only £100.00 or perhaps as much as £500.00, there will be a number of different lenders to choose from. In addition to the range of different loan values which are on offer within this online market, there are also a good selection of repayment options as well. It would probably be fair to say that when we think about quick payday loans, we typically think of a loan which needs repaying in full on our next pay date. In reality though quick payday loans can be repaid in a whole host of different ‘shapes and sizes’. This helps to make sure the product is potentially suitable for a whole range of varying consumer needs. This means lenders have kept in mind what is suitable for one; is not always suitable for all and as such choice is really important. When we think about choice exists within all areas of our economy, helping to ensure we can make sensible and informed choices about our finances and even purchases. Today then let’s look at quick payday loans and how they can be repaid.
So one of the most classic ways of borrowing money from quick payday loans is one which comes with a simple repayment. This is the payday loan in its purest sense because the customer agrees the loan is only needed until their next pay date and on this date they can afford to repay all of the loan in one hit. Given that these loans vary in value from £100.00 to £500.00, as discussed above, it does mean that this type of borrowing can come with quite a large repayment amount. This means it is important to ensure the amount due it affordable and realistic, so be sure to check before signing the loan agreement. For those of us looking for more flexible repayment options, the instalment based quick payday loans are the way forward. Instead of repaying the loan as a one-off repayment, instalment borrowing allows the monthly repayment amount to be tailored better to our existing costs and therefore financial needs. Many lenders of the instalment based loans offer several different repayment terms, meaning we could choose to repay over 2, 3 or 4 months for example or perhaps 4, 5 or 6 months as another example. This means we can compare the costs monthly and also the total cost of borrowing as well and then make a decision which suits us best. For those of us who know it would be much more affordable to repay a loan via instalments, one of these type of loans will almost certainly be a much better choice. So the key is to investigate the options available and then make a decision based on what works for you. There can always be times when someone needs money and most likely this can be down to a high number of different things. There can be some people who may require 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 looking to obtain money for some form of home improvements. There can then in contrast be others who may only need a small amount of money as they are looking to have some help just paying a bill or they need some additional funds to just tide their current funds over until they are next paid by their employer. Now regardless of whatever they need money for, if they have this saved away they can then look to use this as required to pay for whatever they need. Some people may then even have enough money saved away to pay for their requirement outright or at least they can put money towards what they need. If it is not possible to use this option then the chances are someone will then need to borrow the money. Quick cash loans for example can be one common borrowing option.
I think it will be fair to say that when most people are looking to borrow money, the chances are they will firstly look to borrow the cash loans from their friends or family. This will becoming much more common if only a small amount of money is needed. They know that obtaining money this way can be done so interest free which is always important. People here then will only pay back what they borrow in the first place. If on the other hand financial lenders are used such as payday lenders, interest will be charged on any amount that is then obtained. Some lenders offer better rates to customers including rates on the interest so always bear this in mind. Some finance types such as payday or other quick cash loans can work out to be an expensive way of borrowing money. Just like turning to money saved, turning to friends or family can be useful and beneficial for people but unfortunately for everyone it is just not an available option when borrowing. Payday lenders could then help provide people with loans if they are needed. This lender aims to help people with bad credit get loans when they are required. People here can borrow quick cash loans for amounts usually up to £500.00. These can help people prepare for the unexpected and can also help people last out with their money until they are next paid from their employer. Never should any short term loan ever be used as a long term borrowing option. As the name would suggest quick cash loans aims to give people the money quickly. This is probably the best benefit that they offer as well as discussed before they can help people with bad credit get finance when their other borrowing options are then limited. In recent years the manner in which payday loans are offered to consumers has changed. We all usually think of payday loans as a very particular type of borrowing and as such assume there is only one manner in which repayments can be made. This assumed repayment term is one which asks that repayment be made as a one-off sum on the date on which the customers next employment pay date falls. Those of us who have this assumption would be right in many respects as in fact for many years, this is the manner in which payday loans were needed to be repaid. In the modern day market place payday loans have changed quite considerably though and nowadays consumers are offered more varied repayment options, should they be needed. The change in product offering is just one of the many major changes which have unfolded in the payday loans market in recent years, another of which being a change to the regulating body responsible for the entire operations of the market and the lenders who operate within it. As of 2014 the FCA; full name Financial Conduct Authority, have been in charge of the payday loans market and the entire operations it contains. The FCA were given the task of ensuring this multi-million-pound consumer market was still serving the needs of consumers effectively and in doing so discovered a lot of change was needed.
Through what turned out to be a yearlong investigation, the FCA discovered that the original product offering of these lenders had become somewhat dated. The payday loan was in principle a useful consumer borrowing choice but the manner in which repayment was requested had long become dated. Given that payday loans ranged in value between £100.00 and £500.00, the repayments due when interest was accounted for often became costly. Although the repayment due was always very clear, this did not always mean it was affordable and due to lack of any other suitable alternative many consumers continued to borrow in this manner despite their potential inability to afford the repayment amount due. In order to resolve this long running problem, the FCA introduced new rules and guidelines concerning responsible lending practices which meant lenders within the market needed to reconsider how it was they delivered their product and more importantly, its repayment options. This is why nowadays payday loans are offered via the means of instalment based repayment options. Instead of asking that customer make a single repayment to repay the loan amount borrowed, instalment based repayments are common place. This means should it be more sensible and affordable to do so, consumers can agreed a monthly repayment term, at the point of borrowing, which will allow repayments to be to spread over smaller and more manageable monthly terms. The change in regulator, product and general rules which govern the market and how loans are granted mean that the payday loans are now considered a much better equipped borrowing resource and therefore able to meet the realistic needs of consumers. When it comes to online payday loans one of the most important factors is that of affordability. Affordability in the context of these online loans relates to each applicant’s true ability to afford the loan and how lenders reach the conclusion as to whether they do or not. Surprisingly affordability has not always been at the centre of the approval process of online payday loans and in fact this has only become the case in the last few years. The tipping point was the introduction of the FCA as the regulator for the entire operations of the market. In early 2014 the Financial Conduct Authority (FCA) were appointed as the organisation responsible for the entire operations of all those lenders who offer online payday loans. This meant that the FCA had the required power to make changes where they were needed. In order to establish areas for improvement the FCA conducted a mass scale investigation into the lenders of the time and the common denominator; a lack of affordability assessment.
Not only did the FCA uncover the fact that lenders were not correctly identifying where loans were affordable or not; furthermore, the loans being offered were also lacking in flexible repayments which went against affordability. This issue stemmed from the fact that the product originally on offer was very limited. The product in question was known commonly as the ‘payday’ loan and as the name suggested offered a product which was focused specifically on repayments being made on the customers next pay date. Where this specific repayment structure was always made clear to borrowers, the cold hard facts of the manner were that in too many instances the loan proposed and later granted, was simply not affordable. The payday loan meant agreeing to a one-off repayment comprising of the entire loan amount plus the interest charged by the lender. Given that the loans themselves ranged in value from £100.00 to £500.00; it is easy to understand how the repayments due under such agreements quickly became expensive and it did not take long for the FCA to high light this fundamental flaw. So not only were online payday loans limited in their product offering but through research the FCA conducted that this then lead to many instances where the loans being granted were simply not affordable as a result. In order to resolve this the FCA introduced an entirely new set of rules and regulations for the online payday loans lenders to operate by. This meant not only making their products more flexible, therefore making them more affordable and consumer friendly but in addition lenders were required to adopt a completely new approach to lending. This approach is one which centres around affordability and making sure the loan requested is truly and evidently affordable. In order to understand such manners adequately the modern day online payday loans lenders are concerned with greater levels of detail as far as their applicants are concerned and in addition have replaced payday borrowing with instalment based borrowing where suitable to do so. |
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December 2016
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