Payday loans and their modern form

In recent years the manner in which payday loans are offered to consumers has changed. We all usually think of payday loans as a very particular type of borrowing and as such assume there is only one manner in which repayments can be made. This assumed repayment term is one which asks that repayment be made as a one-off sum on the date on which the customers next employment pay date falls. Those of us who have this assumption would be right in many respects as in fact for many years, this is the manner in which payday loans were needed to be repaid. In the modern day market place payday loans have changed quite considerably though and nowadays consumers are offered more varied repayment options, should they be needed. The change in product offering is just one of the many major changes which have unfolded in the payday loans market in recent years, another of which being a change to the regulating body responsible for the entire operations of the market and the lenders who operate within it. As of 2014 the FCA; full name Financial Conduct Authority, have been in charge of the payday loans market and the entire operations it contains. The FCA were given the task of ensuring this multi-million-pound consumer market was still serving the needs of consumers effectively and in doing so discovered a lot of change was needed.

Through what turned out to be a yearlong investigation, the FCA discovered that the original product offering of these lenders had become somewhat dated. The payday loan was in principle a useful consumer borrowing choice but the manner in which repayment was requested had long become dated. Given that payday loans ranged in value between £100.00 and £500.00, the repayments due when interest was accounted for often became costly. Although the repayment due was always very clear, this did not always mean it was affordable and due to lack of any other suitable alternative many consumers continued to borrow in this manner despite their potential inability to afford the repayment amount due. In order to resolve this long running problem, the FCA introduced new rules and guidelines concerning responsible lending practices which meant lenders within the market needed to reconsider how it was they delivered their product and more importantly, its repayment options.

This is why nowadays payday loans are offered via the means of instalment based repayment options. Instead of asking that customer make a single repayment to repay the loan amount borrowed, instalment based repayments are common place. This means should it be more sensible and affordable to do so, consumers can agreed a monthly repayment term, at the point of borrowing, which will allow repayments to be to spread over smaller and more manageable monthly terms. The change in regulator, product and general rules which govern the market and how loans are granted mean that the payday loans are now considered a much better equipped borrowing resource and therefore able to meet the realistic needs of consumers.