There is a good selection of different products which are available from payday loan lenders nowadays. It would be fair to say this was not always the case but changes in recent years have transformed the market into one which once again is able to support the short term borrowing needs of customers. Since 2014 and when the FCA became the regulators of the sector, a number of key changes have unfolded which has meant that today’s lenders are better equipped to support consumers and those unable to do so effectively have left the market. Whilst payday loan lenders still offer a specific type of borrowing, the manner in which they do so has certainly changed and by that, I mean improved. Today let’s look at payday loan lenders in some greater detail and doing so hopefully gain a better understanding of how the market now operates.
For those of us looking to borrow a small sum of money, the payday loan lenders might just be a suitable option. Nowadays consumers are offered flexible and varied lending options which are available via easy to follow and clear online application forms. Most lenders aim to deliver a lending decision in a timely manner but will not sacrifice their required checks in order to deliver a loan in a quicker time frame. Most lenders not only offer a range of different loan amounts but also flexible repayment options also. This means as customers we have several repayment options at our disposal, based on monthly instalments. Depending on the lender, this could mean a 2 month repayment term or anything up to a 6 month repayment agreement for example. The repayment term available will always have the loan value factored in; meaning where a £100.00 loan is offered over 3 months, a larger loan, say of £500.00, may also be offered over longer terms of repayment. This consideration, like so many along the way of the application, are based on the importance of affordability.
Affordability in the context of payday loan lenders means assessing the applicant’s ability to afford the loan. This means lenders will complete a series of different checks to ensure each individual applicant is able to afford the loan and repayment term being requested. Without affordability assessments during the application process, it would be very difficult for lenders to effectively meet the core requirements of the FCA. This is why many applications will now include the requirement to complete a budget; detailing all current income and expenditure. This information, along with experience, knowledge and through reviews of the applicant’s credit, will lead lenders to calculated and informed lending decisions. Without offering instalment style borrowing in all honesty it would be very difficult for lenders to offer realistic and affordable lending options to consumers. The restrictions of the original product meant that repayments were too costly and realistically, not many consumers could affordable them. Nowadays and thanks to the introduction of the FCA and instalment borrowing, the market as a whole is a much better place.