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For many years it would be fair to say that payday loan lenders have been negatively perceived by consumers and reviewers alike. Given their existence within the short term and high cost credit sector, many have come to believe the market in general is overpriced and unrealistic to the true needs of the customers it serves.<br>
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For many years it would be fair to say that payday loan lenders have been negatively perceived by consumers and reviewers alike. Given their existence within the short term and high cost credit sector, many have come to believe the market in general is overpriced and unrealistic to the true needs of the customers it serves. This was not always the case and in fact in the early days payday loan lenders were welcomed by consumers thanks to its, at the time, unique product offering. What the payday loan lenders offered which had not been seen before was to offer consumers the ability to borrow a small sum of money over a short period of time. Given that the loan values were considerably lower than that of the loans offered by more traditional lending resources; such as the bank, they could offer loans in a completely different way. Fundamentally the biggest difference was the fact the payday loan lenders offered a discreet and online based application process in the vast majority of cases. This meant that consumers were able to apply online at a time which suited them and their individual needs. Instead of having to visit the bank, shop front and making a call, the payday loan lenders offered an application which could be started and completed entirely online.
As a result consumers were happy with the ability to borrow in a manner which was convenient. The product being offered by the payday loan lenders was in keeping with the application process in that it was designed to be simple to understand and easy to follow and this was delivered by way of a single repayment. This meant consumers borrowing from the payday loan lenders were given loans on the understand that on the arrival of their employment pay date, although some lenders allowed any given date to be chosen within a 35 day period, the entire amount borrowed and the charges were repaid. Although undoubtedly a simple and clear concept what was not correctly accounted for was the customer true and realistic ability to afford this style of repayment and as such many customers found themselves paying expensive charges and interest due to lack of repayment.
What the payday loan lenders learned over the years was that in order to offer a lending resource which was truly useful a more flexible product offering needed to be made. As such in more recent times the payday loan lenders, thanks to the help of the Financial Conduct Authority, have adapted the principles by which loans are granted. This principle is one of affordability which means making adequate efforts to ensure the loan offered is truly affordable. To achieve this payday loan lenders now offer loans which can be repaid in a number of pre-agreed instalments and the number of instalments, depending on the lender, can be selected by the applicant at the point of borrowing. This is coupled with better and more in-depth checks by lenders and as such more informed lending decisions.
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