The market for online borrowing is now a completely different place to what it once was, the product has changed and with that so have the lenders. Some of the more well-known lenders who were most commonly associated with this market are fast becoming replaced with more consumer friendly and customer focused lenders, one such lender is Peachy. For many years the online lending market decreased in terms of its popularity with consumers due mainly to its obvious inability to truly meet the changing needs of the modern day consumer. This once incredibly popular and useful market developed over time into a resource which was often used, simply as a result of a lack of suitable alternative.
The original product offered by the short term loans market was a world away from the modern type of online loan offered by the likes of Peachy. The product of the early days was based on a single payment repayment structure. This meant customers who were approved for a loan were asked to repay the amount borrowed, plus the interest charged, as a one-off repayment. Typically these loans allowed customers to borrow the agreed amount until their next employment pay date, meaning the loan repayment periods were never longer than 31 days. The fundamentals of these type of loans was always explained clearly upfront but the issue was simply that for many consumers, this style of repayment was unaffordable. Usually interest was charged at about £30.00 for every £100.00 which was borrowed and that meant a £300.00 loan would carry a repayment of £390.00 on the agreed date. For customers who later expressed their inability to make the agreed repayment, it was more than likely the amount would increase at an alarming rate and alternative repayment structures offered where restricted and expensive to the customer long term.
Where Peachy loans are different is that like other relatively new lenders to the market, their repayments are made on an instalment basis which is agreed up front. This means the new breed of online loans are much more flexibility than ever before and allows customers to make a more informed and sensible borrowing choice. Many lenders in the modern market have moved away from the old style of borrowing entirely and instead now offer instalment based loans which can be repaid over a range of repayment terms. This could mean a few months or as much as a year in the case of some lenders. Many lenders through the support and guidance of the Financial Conduct Authority also now go to extra lengths to ensure the repayment terms offered are truly suitable to the individual applying and their current financial commitments. This is achieved through a number of mechanisms but primarily the focus is the applicant’s current credit reference file information and budgeting information supplied at the point of applying. This such data gives the lender the opportunity to better understand what is realistic and therefore possible for the individual to repay. That’s why the likes of Peachy loans are able to thrive whilst older style lenders are rapidly falling behind.