Short Term Loan

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Short Term Loan
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Facts About Short Term Loans When it comes to
the products and services offered by short term
loans lenders there is plenty of choice to
consider. Over the years this market place as a
whole has evolved quite considerably and as such
the modern day short term loans lenders are
somewhat of a completely different breed to that
of lenders in years gone by. Nowadays this market
place is regulated by the Financial Conduct
Authority and as such, a lot of changes have
taken place concerning how the market lenders are
able to conduct their businesses. In reality the
short term loans market had become arguably
dated. For many years the vast number of lenders
operating in the market offered a very similar
product which was restricted in its lending
options.
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Due to this limited product range what became
clear over time was the fact that these loans, in
their previous form, were not always able to
effectively meet the needs of consumers. It was
the work of the Financial Conduct Authority which
really highlighted this fact and as such have
investigated great efforts in improving how the
market as a whole now operates. The Financial
Conduct Authority or FCA as its also known
conducted extensive and in-depth research of the
market and the short term loans lenders who
operated within it for a period of a year. Over
this time there were several key points which
were discovered and required significant
improvement. These points were firstly the type
of product being offered and its suitability for
consumers and secondly the concept of
affordability and its lack in terms of the
application and approval process of these loan.
Concentrating on the first point, the FCA
discovered that the type of product being
offered, was in a majority of cases, not truly
suitable to the consumers using the product. This
product was known as the payday loan and as the
name clearly suggests, allowed the applicant to
borrow until their next employment pay date.
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This meant the commitment of a lump sum repayment
in often what was less than a months period.
Whilst for some this type of borrowing was
suitable, the FCA discovered that in the vast
majority of cases many customers struggled to
make repayment as agreed and instead may interest
based repayments not reducing the amount owed.
The second point here is the short term loans
lenders lack of suitable checks concerning their
applicants ability to afford the loan. This meant
there were many examples where loans were granted
but in reality were simply not affordable. In
the current marketplace and thanks to the help of
the FCA, the products and services are more
flexible, offer better repayment options and are
better considered by lenders. Depending upon the
requirements of the individual applicant lenders
now offer instalment based loans which are
designed to offer affordable amounts and terms
based on the needs of the customer. These changes
are positive and mean the market has been able to
move forward in many respects to a more fair and
more customer focused existence.
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