Short Term Loans – The Checks to Expect

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Short Term Loans The Checks to Expect
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IN THE PAST OBTAINING A SHORT TERM LOAN COULD BE
DONE SO QUICKLY AND EASILY AND ALTHOUGH THESE TWO
FEATURES REMAIN IN PLACE TODAY, THE OVERALL
APPLICATION PROCESS HAS CHANGED QUITE
DRAMATICALLY. WHEN SHORT TERM LOANS FIRST BECAME
POPULAR THEY WERE WELCOMED BECAUSE OF THESE KEY
FACTORS. THEY EFFECTIVELY PROVIDED CONSUMERS WITH
ALMOST INSTANT ACCESS TO ADDITIONAL FUNDS IN A
WAY THAT HAD NOT BEEN SEEN BEFORE. 
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IN YEARS GONE BY A CONSUMER LOOKING FOR A LITTLE
EXTRA CASH WOULD HAVE HAD TO TURN TO THEIR BANK
OR CREDIT CARD AND EITHER OF THESE COULD MEAN A
DELAYED APPLICATION PROCESS PARTICULARLY FOR A
NEW CREDIT CARD. SHORT TERM LOANS HOWEVER WERE
DIFFERENT. A CONSUMER COULD APPLY FOR THE LOAN
ONLINE AND IN MOST CASES RECEIVE THE FUNDS THE
VERY SAME DAY. THIS SIMPLE AND VERY PRIVATE
PROCESS MEANT THAT ALMOST OVERNIGHT THE WAY IN
WHICH CONSUMERS BORROWED CHANGED.
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SUCH LOANS MEANT A CONSUMER NO LONGER NEEDED
TOEXPLAIN THE REASON FOR THE LOAN AND COULD
INSTEAD MAKE THE BORROWING DECISION FOR HIMSELF.
FOR THOSE WHO HAD AN IMMEDIATE FINANCIAL
SHORTFALL THIS PROVED EXTREMELY USEFUL. THE
FUNDAMENTAL ISSUE WITH THIS TYPE OF BORROWING WAS
NOT JUST THE EASE OF ACQUIREMENT BUT ACTUALLY,
THE PRODUCT BEING OFFERED. IN THE PAST A CONSUMER
LOOING TO BORROW ANYTHING FROM 100.00 TO
TYPICALLY 500.00 COULD DO SO AND FIND THE FUNDS
IN THEIR ACCOUNT THAT DAY. 
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THE AGREEMENT WAS STRAIGHT FORWARD AND ASKED THAT
THE AMOUNT BORROWED BE REPAID ON THE CUSTOMER
NEXT PAY DATE, WITH THE INTEREST APPLICABLE. MOST
LENDERS CHARGED THEIR INTEREST PER AMOUNT
BORROWED, RATHER THAN TIME BORROWED. THIS MEANT
ANYONE BORROWING 400.00 WOULD PAY IN THE REGION
OF 520.00 ON THEIR PAY DATE. THIS MEANT WHETHER
THE AMOUNT WAS BORROWED A MONTH BEFORE PAY DAY OR
A WEEK THE AMOUNT WAS EXACTLY THE SAME.
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QUITE OBVIOUSLY THESE AMOUNT WERE EXPENSIVE BUT
ALSO THE CONCEPT OF A LUMP SUM REPAYMENT PROVED
UNREALISTIC FOR MANY WHO INSTEAD TURNED TO THE
OFFERING OF AN EXTENSION. AS THE NAME SUGGESTS A
CUSTOMER COULD CHOOSE TO EXTEND THEIR LOAN BUT
THIS WAS NOT A FREE SERVICE. TO EXTEND THE LOAN
THE LENDER ASKED THAT THE INTEREST APPLIED BE
REPAID INSTEAD, IN OUR EXAMPLE ABOVE THATS
120.00. ALTHOUGH AT FACE VALUE THIS SEEMS LIKE A
SUITABLE OPTION,
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THE REAL ISSUE WAS THE FOLLOWING MONTH WHEN
REPAYMENT IN FULL WAS THEN DUE AND THE FULL
420.00 WAS APPLICABLE. EFFECTIVELY CONSUMERS
WERE NOT REDUCING THE AMOUNT THEY OWE, SIMPLY
DELAYING IT. FOR MANY THIS WAS A CYCLE OF DEBT.
THIS IN TURN LEAD TO CONSUMERS BORROWING FROM
MULTIPLE LENDERS AND ENDING UP WITH LOAN
REPAYMENTS HIGHER THAN MOST OF THEIR SALARY.
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HOW DID THIS HAPPEN? IN SIMPLE TERMS THE CHECKS
BEING COMPLETED BY LENDERS WAS SIMPLY NOT ENOUGH
TO GENUINELY UNDERSTAND IF THE CUSTOMER HAD THE
MEANS TO MAKE THE CONTRACTUAL REPAYMENTS. THIS
MEANT EVENTUALLY A LENDER COULD AND WOULD HAVE
BEEN LENDING TO SOMEONE WHO ALREADY HAD A NUMBER
OF SHORT TERM LOANS.
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AS THIS FACT BECAME INCREASINGLY CLEAR THE MARKET
AS A WHOLE STARTED TO TRANSFORM AND NOT ONLY NOW
HAS THE PRODUCT BEING OFFERED CHANGED
DRAMATICALLY BUT SO HAS THE EFFORTS THE LENDER IS
MAKING TO LEND RESPONSIBLY. TYPICALLY NOW A
CONSUMER LOOKING FOR A SHORT TERM LOAN IS LIKELY
TO BE OFFERED.
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A FAR MORE FLEXIBLE INSTALMENT LOAN PRODUCT WHICH
OFFERS A RANGE OF MONTHLY INSTALMENTS INSTEAD OF
AN UNREALISTIC LUMP SUM REPAYMENT. THIS
IMMEDIATELY ASKS THE CONSUMER TO TAKE SOME
RESPONSIBILITY IN BORROWING WISELY AND SELECTING
A TERM THAT IS REALISTIC. THE LENDER ALSO NOW
PLACES SPECIFIC FOCUS ON THE APPLICANTS
AFFORDABILITY.
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THIS IN SIMPLE TERMS MEANS THE LENDER ASKS THE
APPLICANT TO PROVE ACTUAL DETAILS RELATING TO
THEIR MONTHLY EXPENDITURE. MANY SHORT TERM LOAN
APPLICATION FORMS NOW ASKS THE BORROWER TO
PROVIDE THE AMOUNT THEY RECEIVE INTO THE
HOUSEHOLD MONTHLY AS WELL AS A BREAKDOWN OF THE
MONTHLY COSTS. THIS WILL TYPICALLY INCLUDE MONEY
ALLOCATED FOR RENT, LIVING EXPENSES, OTHER CREDIT
COMMITMENTS AS WELL AS OTHER MONTHLY GOINGS THAT
MAY NEED ACCOUNTING FOR. 
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THE LENDER CAN THEN USE THIS INFORMATION
ALONGSIDE THE CREDIT REFERENCE FILE AND ALL THE
OTHER INFORMATION SUPPLIED IN THE APPLICATION TO
ENSURE THE APPLICANT HAS THE TRUE ABILITY TO
REPAY THE LOAN. THIS APPROACH ALSO ENSURES THE
LENDER CAN QUICKLY SEE IF THE CUSTOMER IS
REALISTICALLY OVER COMMITTED FINANCIALLY AND MAKE
THE CORRECT CHOICE NOT TO AGREE THE LOAN.
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AGAIN THIS SHOWS ANOTHER MASSIVE STEP FORWARD ON
THE PART OF THE LENDER BY ASKING THE APPLICANT TO
PROVIDE INFORMATION ACCURATELY TO ASSIST THEM IN
LENDING RESPONSIBLY. PROVIDING THE LENDER AND
BORROWER CONTINUE TO IMPROVE THEIR PRACTICES WHEN
IT COMES TO LENDING, THE MARKET AS A WHOLE WILL
BE A MUCH MORE RELIABLE PLACE.
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