Short term loans come in a range of different sizes and repayment terms. The modern day lender of such loans aims to deliver a resource which is not only flexible but also considerate of the realistic needs of the modern day consumer. Where things have changed in this market is fundamentally down to a new regulating body who is responsible for the overall operations of the lenders. This new regulating body is the Financial Conduct Authority (FCA) and since they were introduced a few years ago, the marketplace has been completely transformed. Not only do lenders now have to be FCA approved if they wish to offer lending options but the options they do offer need to meet the rules and regulations newly set out by the FCA. This means as consumers we can be confident that any of the lenders we consider, they will effectively have the FCA’s backing in terms of both product and service.
Terms of Short Term loans
In order to help ensure the product being offered is truly flexible, short term loans lenders offer choice when it comes to how their loans are repaid. This can be delivered thanks to the introduction of instalment based repayments. This means when applying for these sort of loans it is likely you will be presented with a selection of different repayment terms. This could mean for example, repayment split over 1, 2 or 3 months for example or could mean 3, 4 or 5 monthly instalments. Depending on the loan amount being requested it is not uncommon for short term loans lenders to offer repayment terms up to 6 months and in some cases beyond this amount of time. Quite sensibly the more that is being requested to be borrowed will result in the longer repayment terms being offered.
Take for example a £500.00 short term loans lender. Given that often short term loans are granted for average loan amounts of £300.00, a larger loan amount as with this example may mean longer repayment terms. Whereas for many of us repaying £500.00 as a single repayment, when interest is accounted for, is most likely a too costly option, making a number of pre-agreed monthly instalments at a lower rate is likely a sensible choice. Of course for those of us only looking for a £100.00 short term loans lender, it may be that we have the resources to repay this level of borrowing, with the interest payable, as a one of payment. So the term of repayment being offered by any short term loans lender will have the loan value directly in mind. As well considering the loan amount being offered, short term loans lenders will also take into account an applicant’s ability to afford the requested loan. This means viewing information available from Credit Reference Agencies as well as budgeting information supplied by the applicant at the point of applying. A collective understanding of all of this information is ultimately what allows lenders of short term loans to make an informed decision regarding any submitted application.
When it ever comes time for someone to borrow money, there may be some different people who do not know exactly what borrowing options they have. They may just not know what different options they could be entitled to and for this reason it is never wise to ever rush into applying for finance before the different options are looked into. Some finance types are certainly better than others in what they can offer to people. From the financial market place these days’ people can look to obtain both short term loans such as payday loans and instalment loans if a loan like borrowing is required. This way people can then look to borrow a selection of different loan amounts for repayments then due back over a number of different repayment terms. As well as loans people can also look to credit cards as a way to borrow money. This is another very common way to obtain finance. It can allow people the chance to pay for different items as well as for them to withdraw cash on credit up to a set limit and this is then done by the use of the card itself.
Payday Loans Often Expensive Finance
In this article I am focus solely on payday loans and other short term loans and explain what these provide to a range of different borrowers who need to obtain cash. I have certainly found that in recent years it seems more and more people have turned to this way of borrowing as a way to obtain finance when they need to. When I say this way of borrowing I mean payday loans and other short term loans. This can often be a way for someone to obtain a small cash amount of usually up to £500.00 for that person to then repay the debt back over a number of different repayment terms. For any loan however, to be classed as a short term loan it must be repaid back to the lender within a maximum time frame of twelve months. These loans are commonly known to help people get cash quickly but for a very limited period of time. Some of these short term loans can be expensive.
When people think about short term loans they will most likely start to immediately think about payday loans. Now although payday loan from payday lenders is a common short term loan when available it is certainly not the only way of short term loan borrowing. With some of the loans people can borrow the same kind of amounts than payday loans but they can then look to repay this debt over a number of months rather than clear the loan in one go which a payday loan would require. This may be a better kind of borrowing as people can get a small cash amount as before but they can then spread the cost of the debt over a repayment term that suits both them and the borrower. This will be easier than clearing the debt in one go as a payday loan would always require.
As individuals we are all subject to having a credit rating or credit score and this information is gathered and formulated thanks to the Credit Reference Agencies. Our score will be directly reflective of our previous and current performance regarding credit based commitments. Records are held for previous credit agreements for a period up to 6 years and as such how you chose to repay credit commitments of the past can have a lasting effect on your credit future. What many of us may not be aware of is the fact that even small credit agreements can and do effect our ability to obtain credit in later years; such as communication suppliers. This means even the most ‘basic’ of credit facilities will and do exist within an individual’s credit reference file. In instances where agreements of this nature have been either poorly repaid or defaulted entirely, an individual may later discover that they are unable to obtain other forms of credit; such as Hire Purchase agreements or even a mortgage. This is why it is so fundamentally important to ensure that any form of credit, large or small, is managed and repaid as it required.
Assist Short Term Loans
Whether it be a short term loans lender or a mortgage provider, all lenders will access an individual credit report before making a decision as to whether their product is suitable. Of course lenders of short term loans will be looking for a different ‘set’ of results compared to that of a mortgage provider given the sums of money being considered by each. That though, is not to say one will except ‘poor’ credit more so than the other and this is really the decision of the individual lender. Certainly as fair as mortgage providers are concerned, it would be fair to stay they are looking for examples of successful and timely repayments as fair as prior credit performance is concerned.
For consumers who are aware that previous credit commitments have been poorly managed or even defaulted through lack of repayment altogether, they may also be aware that obtaining future credit can be difficult. For consumers in this position the sensible use of short term loans may be an option worth considering. Given the fact that short term loans are generally for no more than £500.00 in value, there may be an opportunity to demonstrate you can now repay a small credit commitment as required. Using short term loans and repaying them as is requested will allow an updated ‘imprint’ on your credit reference file and furthermore may highlight to potential future lenders that you have gained experience in managing your credit based commitments in a sensible manner. Short term loans in their current form are generally flexible and therefore able to offer a number of different repayment terms; at the point of applying. So making a sensible and affordable decision concerning the right type of loan, for your individual needs is likely to be achieved with a level of ease.
Payday loans are a means for borrowing between £100.00 and £500.00 typically and the application process in the vast majority of cases takes place online. This means that lenders will assess the suitability of the loan in the most part by electronic means. Generally speaking it is the attention of payday loans lenders to deliver a service which is flexible, discreet and timely, with most lenders being able to make a lending decision the same working day the application is submitted. It is important to realise that lenders will not place speed as the uppermost important factor and therefore will not progress an application simply based on this. Instead modern day payday loans lenders will focus their efforts on making sensible and affordable lending decisions for their customers. Let’s look at the process of applying for payday loans, in greater detail, to understand then exactly how this generally achieved.
Payday loans as mentioned above are accessible via the means of an online based application process. To apply for a loan a lender will offer an online based application form which can be completed usually in little longer than 10 minutes. Typically speaking the application form itself will be broken down into a number of clear and logical steps, designed to gather all the key information regarding the applicant to make an informed lending decision. These sections usually focus around personal information, employment details and banking information. By gathering this information it allows the lender to run a series of automated checks to assess whether the requested loan can be deemed as suitable. These automated checks are completed via the means of what is commonly known as a ‘decision engine’. A decision engine assesses the identity, address, banking information and credit worthiness of an applicant. It will seek to verify the personal information of the applicant and then assess the credit worthiness against the individual payday loans lenders individual criteria. If at this stage any of the lenders requirements are not met, there is a high probability that the application will be declined.
Application Process for Payday Loans
In most cases once the decision engine has completed its checks and in essence the application has been provisionally accepted by the lender. At this point the lender will likely manually review the application to ensure all the information contained is as they would require. At this stage there may be a requirement for the applicant to provide additional documentation to support the application. Additional documentation is usually requested when an automated check has highlighted a need to verify some of the information relating to either identity, address or even employment. In some cases there will not be a need to provide any form of documentation in order for the payday loans lender to make their decision. Providing the lender is satisfied all of their electronic and manual checks have been successfully passed, it is at this point that the lender will have the ability to approve the loan and transfer the funds, usually via faster payment, to the account nominated in the application.