When it comes to payday loan lenders there are a number of different resources which are available. Whether you are looking for the ability to borrow a small sum of money until your next pay date or perhaps repayments of the sum over a number of pre-agreed monthly repayments, payday loan lenders are likely to have a resource to match your needs. That said the market which homes payday loans and their lenders has changed quite dramatically in recent years and as such the market which once was, is now functioning in a very different way. Changes to payday loan lenders and their products can be attributed to the Financial Conduct Authority, also known as the FCA, who took control of the entire markets operations in 2014. Since the time of FCA taking charge many payday loan lenders have left the market and those who remain, offer a service and product which specifically meets the FCA’s requirements. This of course is great news for consumers as it means those lenders who were not effectively serving the short term borrowing needs of consumers no longer exist and those who do remain, do so in a professional and focused manner thanks to the FCA’s efforts. All those who are classified as a payday loan lenders must be FCA approved to trade and if approval is not granted, the lender has no choice but to stop trading.
One of the key faults of lenders recognised by the FCA was their inability to correctly assess an applicant in terms of their true ability to afford the resource being offered to them. This highlighted to the FCA a lack of the application of affordability in terms of the approval process adopted by lenders. Instead of looking in-depth at applicants current and previous credit performance and combining this information with the cost of other monthly expenses faced by the applicant, lenders were often approving loans in a somewhat ‘blind’ fashion. This meant loans were granted which, in all honestly, some customers simply did not have the means to then make. When the FCA discovered this fact it gave them the basis for new rules and guidance in terms of better assessing the affordability of each and every applicant. The end result is a lot of hard work and commitment from lenders to adapt their approach to lending and in doing so make better and more evidence based lending decisions. This is fundamentally why nowadays a payday loan lenders application will ask that the customer provide an accurate and honest monthly budget. The budget needs to include all of the customers regular out-goings and then the lender can assess this information as part of the application process. Lenders in todays market will then compare this information to information which is available in the various different Credit Reference Files. The completion of this process is known as an affordability assessment. This check forms the basis for how lenders decide is a loan request is ultimately suitable or not.
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