Payday loan lenders and the product they offer

Payday loan lenders have been in operation for long enough now that the vast majority of us will already know what this online borrowing market is all about. When these lenders first came along they gave a brand new access to borrowing which had quite simply never been seen before. The payday loan lenders were all about giving consumers the ability to borrow on a small scale and therefore offered a completely different lending resource compared to that of existing lenders such as high street banks and credit card facilities. Instead, these online loans gave consumers the ability to take borrowing into their own hands in many respects and this was thanks to the online and therefore discreet nature of applying offered.

Given the small value of loans up for consideration, a customer could apply for a loan and expect to receive a decision very quickly and actually this mostly remains true in today’s market place. Certainly the application process has only ever become more streamlined thanks to better displays within the application and a greater level of understanding on the part of lenders to make effective and sensible lending decisions. The reality is that the last few years have seen the payday loan lenders and their products being utterly put through their paces by the newly appointed regulating body. This regulating body is the Financial Conduct Authority and it has been their task over the last few years to somewhat completely transform the market place as a whole.

What many of us may already realise it that for many of the years prior to the Financial Conduct Authority’s rule, the payday loan lenders had start to become an unpopular choice amongst consumers. This was not to say that consumers did not continue to turn to the loans because in fact they did but there was certainly a general feeling that the loans were no longer effective. The problem was there was not a suitable alternative available and instead consumers had little option but to continue to return to the market and the limited product selection which was on offer at the time.

All of this boils down to the fact that for many years payday loan lenders offered a product which was limited in repayment options and this product was the original payday loan. When approved for such loans a customer would also then agree to repay the entire balance as a one-off repayment on their next employment pay date which of course meant a sizable one-off repayment. What the Financial Conduct Authority concluded, amongst other things, was that the loans on offer needed to be more flexible. As such the modern day payday loan lenders, who are fully regulated by the Financial Conduct Authority, offer loans with more flexible repayment terms and this is thanks to the addition of instalment based borrowing. This means instead of agreeing to repay the loan in a lump sum, customers are given the option to repay via the means of monthly based instalments; agreed at the point of obtaining the loan.