Direct Lenders can Offer a Range of Different Finances

There can always be occasions when someone needs money and to be fair this can be down to so many different reasons. There can be some people who need a potentially large amount of money, this can be because they need to make a large one off expensive purchase of some kind. This can be for a possible new car or maybe someone could even look to be putting down a deposit for a new house. On the other hand there can also be people who just need a small amount of cash to possibly help tide their finances over until their next time they are paid. Some people could also need a small amount of cash borrowed as they had an unexpected bill arrive of some kind. Now no matter what the reasons are for ever needing money if people have this money saved they can use it as required for what they need, some people could possibly pay for their requirement outright or at least people can pay money towards what they need. If that is not a valid option for someone then the chances are people will have to borrow what they need.

When it comes to borrowing money some people or may not know that there are a number of different borrowing options available for people to apply for and then where applicable take out. That is just one of the many reasons why no one should ever just rush into applying for the first piece of finance that comes along their way. People can apply for short term loans where they can borrow small amounts from direct lenders and then they can repay the debt back over a short time frame. Instalment loans are a common borrowing alternative and here people can often borrow larger loan amounts from direct lenders and then repay those lenders back over a much longer period of time. These are the most common loan available. Credit cards are also a very common way to borrow money when people need to, they allow people on credit to pay for items or withdraw cash via the use of the card.

Direct lenders often offer finance with a range of flexibility so people can decide what they want to borrow and then repay the loan over a time frame that is both affordable for someone and one that basically just suits there current financial situation. This is not the case for payday loans borrowing. These loans are often funded to people who have poor credit, people can often take these loans and then repay the debt the next time they are paid and no other financial repayment terms can be available. People here as well can only usually borrow amounts from £100.00 up to £1000.00. Payday loans from direct lenders are also usually an expensive way to borrow money. With instalment loans as the alternative, people can often borrow larger amounts of different values and then repay the debt over a much larger range of repayment terms. That makes the instalment loan typically a large more flexible type of finance than the basic short term payday loan.

WHAT IS AN INSTALLMENT LOAN?

An installment loan is a loan borrowed for an agreed set amount that is repaid over several months in installments until the full balance is settled. Many customers will take out or consider making a loan application at some stage in their life, there are many benefits and a few negative factors when looking into this but first people need to be made aware of what an installment loan technically is and what customers are originally signing up for.

An installment loan is a set amount borrowed by a customer and is then repaid over an agreed set period of time, each loan agreement will vary between different repayment amounts and how long customers have this loan for but some instalment loans can be borrowed for up to several years and sometimes for even a longer duration. For example a mortgage is a type of installment loan. When a consumer takes out this type of finance loan their repayments that will be owed will be for a set amount agreed between the lender and borrower, for example if a customer borrows £1,000 it is most likely a loan for that amount would be repaid over a 12 month maximum period but this could vary in some cases, the repayments on this would most likely be up to about £150.00 and I imagine that about nine amounts would be due which would make the total amount paid back at around £1,350. This is quite a high interest loan and most lenders would charge much less interest than this. Before choosing the instalment loan is it always worth exploring the different options available at that time so a customer can find a loan with a good interest rate and one that offers a repayment schedule that is over a fair amount of months or years and more importantly it can be affordable.

When we consider where installment loans typically exist from we tend to think of banks offering consumers a long term lending solution. Often such loans are associated with long repayment periods, often years, and generally speaking for large amounts of money. This in itself is sensible and logical but what about the short term lending market? There are various companies that can offer short term ways of lending but instead of one month short term loans they will offer installment loans, so customers can now then borrow up to £1,000 and repay at a time that suits them more but normally no longer than 12 months would be considered for this type of financial product.

The market for borrowing a small amount of money for a short period of time is now changing and the options which exist within it are growing. For many years if a consumer needed to borrow an amount of cash, typically smaller than an amount available from a bank or other so called high street lender, the options available were limited and very specific. That’s not to say there wasn’t choice, there was in terms of lenders available but the product on offer was a short term loan that had to be repaid over a single month. A consumer would be able to choose from a range of lenders but all presented the same option, borrow an amount until your next pay date and pay the full amount back. If as a consumer you are considering changing the repayment term then contact the lender and advise what you want to repay but also if possible make additional repayments or make early repayments to get the account cleared and paid off much quicker. The customers would not be penalised for this and they may find with earlier repayments the amounts due are less as some of the charges and interest may be able to get removed that could have previously been added.

That’s not to say that this didn’t suit some consumers who just needed a quick money fix but for a lot it has become clear over the years that short term lending habits are more complex than this. As time goes on it is becoming more increasingly clear that consumers now view the short term lending market as part of their monthly income and budget requirement to ensure repayment to a range of life expenses from bills to cars and more can be made and not be missed. That’s why it’s so important that the market is expanding and an increase in lenders offering instalment loans instead of shorter term loans is increasing with it. It is always vital that if an instalment loan is taken out that the repayments due are affordable and are met on time as failing to make repayments on any loans can have severe negative consequences.

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SHORT TERM LOANS

In the past the short term loans market has received a lot of criticism for the way in which it operated and the treatment its customers received. As the sector grew the attention it received from the media and governing bodies alike made it evident lenders were pushing the limits in terms of its practices and equally providing minimum effort to ensure customer service was a major consideration of its overall operation. This realisation has certainly helped pave the way for a more consumer friendly product but also ensured the lenders which remain are able to be successful due to their continued commitments to getting it right. To understand the improvements it is fast best to look back at how far the market has come.

When short term loans first became available they offered something consumers had not had access to before. Whereas in the past a consumer would need to discuss loans of any size with their bank or a shop floor establishment, these loans were available pretty much at a click of a button. In order to be approved typically the customer would complete a relatively short application form online and receive a quick decision from the lender. The product too was simple to understand and offered a clear repayment structure. The old style short term loans asked for a lump sum repayment to be made on the due date of the loan. An applicant could request an amount from £100.00 up to £500.00 typically and when the agreed repayment date arrived this amount plus interest was to be repaid. Often these early loans would apply interest specific to the amount borrowed rather than the time taken which proved expensive. This meant whether a loan was for 15 days or 30 the amount was the same. This way of working was often based on the fact the whole product was designed around the concept of repaying on the customer employment pay date; not therefore considering the time the loan has been in operation. A costly feature for those applying close to their individual pay date.

The whole principle of a lump sum repayment although suitable for some, for most, proved simply unaffordable and meant many consumers borrowed from one lender to satisfy another, creating a cycle of debt. This expense was further compounded by lenders when an alternative repayment option was introduced, these were known as extensions. An extension meant the customer could simply repay the interest applicable on the loan when their due date arrived and then delay the lump sum repayment until their subsequent pay date. Although again a singular extension may not have been costly, many consumers found themselves continuing to extend over a large time frame and ending up stuck when the lump sum repayment was still unaffordable. Another costly feature for the user of such loans.

To seal the deal these lenders were also known to be unhelpful and showed no sympathy to those customers who were in genuine financial hardship and who had tried through extensions and reduced offers, to keep their heads above water. It is therefore no surprise that changes were enforced and those lenders of short term loans who were unwilling to adapt are no longer in existence.

Now things are different, instead of lump sum repayment loans the market is offering a more flexible and consumer friendly loans which are better checked for affordability of repayment. Instead of asking a customer to make one large repayment, an instalment loans lender will offer a range of repayment terms, typically from 3 months up to 12 months. This allows the applicant to make a selective decision as to how best to repay the loan. There are also new practices being brought in by lenders to ensure they are lending responsibly. These checks are mainly focused around assessing affordability. Often an instalment loans application will now ask the customer to supply all information relating to their monthly expenditure which allows the lender to decide clearly if the applicant has the means to make the repayments as set out in the loan agreement. This combined with better analysis of the customer credit worthiness and previous repayment history helps to ensure a true picture of the customers current financial circumstances. It would therefore be fair to say that the short term loans market is gaining back some of the positives it was originally recognised as having, which in time, will hopefully ensure the market is able to remain a useful one for the consumers who turn to it.

Understanding short term loans

There can be a number of different borrowing things to consider before any financial application can then be made someone. That is just one of the many reasons why people should always explore the different avenues of borrowing rather than them just rush into applying for the first piece of finance that comes along their way. People should know that they definitely need the finance in question and that they definitely need to borrow any amount and then if so any amount taken must be a realistic figure. Any loan borrowed must then be affordable for that person to manage so the debt can be repaid back to the required lender. The type of finance can then be considered and here there are often multiple borrowing options, people can often take out both short term loans and instalment loans where different amounts are borrowed and then repaid over a number of different repayment terms. Credit cards are another very common way for different people to borrow money. In the article below I am going to focus solely on short term loans as a way of borrowing and will help people looking to understand what these offer to people.

Short term loans are loans when people tend to borrow small amount of cash for repayments then due back to lenders within a twelve month maximum period of time. People borrow short term loans when they need low loan values and then they aim to repay the debt anything from one single month to the maximum duration of twelve months. People tend to borrow these loans for amounts somewhere between £100.00 and £500.00 or sometimes people can borrow up to £1,000.00. They are used as a short term financial solution and should therefore never be used as a way to borrow any sum of cash for a long term period of time. People should know that taking loans like these can often be an expensive way to borrow the small loans for a very limited period of time. Some short term loans are more expensive than others so always consider that fact.

A major benefit of the product would be the speed in which people can get the money in their chosen bank account whenever there short term loan application is accepted. People apply for the loan usually online or occasionally over the phone in an application process that should only take a matter of minutes to complete. If that same application is then accepted by any lender than the potential borrower can then look to receive the funds in their chosen bank account the very same day of their application being made. There can be some lenders who look to fund their successful applicant within just minutes of their loan being approved. Short term loans can therefore be very useful for people who all of a sudden have an unexpected bill arrive as they can get accepted for their loan quickly, then look to make that requirement payment as soon as possible.

Understanding Short Term Loans

In order to ensure the correct lending resource is obtained it is important to consider all the options presented in the short term loans market. This online borrowing facility has been available long enough now that most consumers are aware of the resource which is offered but may not be aware of the full range of loans which now can be obtained. Although as a whole the market has been operating to offer small loans for over a decade, recent years in the market has seen short term loans be transformed into a much more flexible lending resource. For many years this type of borrowing meant a very specific type of loan which over the years became in many respects an outdated lending resource. As the majority of consumers will know this type of short term loan was known as a payday loan and it offered a very simple and somewhat restricted way of borrowing. As mentioned, recent years have seen the short term borrowing market expand to offer a better selection of loans to consumers, in an effort to continue to meet the realistic needs of the modern day applicant.

Nowadays short term loans are focusing their efforts on offering a product which is a combination of affordable, flexible and therefore realistic. As the years in which short term loans have been in service have passed, it became increasingly clear that the true needs of consumers who use this type of borrowing have changed. Whereas in the early days consumers were able and prepared a specific type of repayment term; offered by the payday loan, nowadays the way in which the modern day consumer manages their finances has changed and as a result so have short term loans. The payday loan which was first into the market aimed on allowing a simple and effective borrowing resource in a finance market which do not account for consumers who only needed a short loan, for a short period of time. The payday loan was delivered in a single repayment term package which meant a consumer could borrow until their next employment pay date, at which time they would repay the entire balance. This meant making repayments in the region of £300.00 to £400.00 as a lump sum.

Nowadays short term loans are able to be more flexible thanks to a massive shift towards instalment based loans. Instead of offering the payday model, most lenders instead offer consumers the ability to borrow and repay the loan over a number of agreed monthly repayments. Typically consumers nowadays are used to making instalments towards the goods and services they require and therefore making instalment based repayments for short term loans seems far more fitting. The change in product offering means consumers now have better control over the amount which is repaid on a monthly basis, depending on the period of repayment which is selected. This also means consumers can elect to repay over a longer period, if needed and understand the about of interest which is repaid is reflective of this time period.

3 Month Payday Loan

About 20 years ago, there was a new financial product that was being retailed in the name of payday loans which was a simple concept in practice. It allowed a certain sum of money to be paid to a borrower in exchange of a post-dated check in collateral. This check guaranteed the repayment of the loan amount. Now this service is being used by millions of people across the globe, where they are paying an average of 525 pounds for an average credit amount of 375 pounds. The difference in the amount is the exorbitant fees that are charged by almost all payday lenders. Payday Loans come in many forms including 3 month payday loans, 6 month payday loans and other types of equal installment loans.

The reason why 3 month payday loans and other options were made available is because the two week time period associated with these loans was what was causing financial distress amongst the borrowers. It was observed that the repayment of the loan with the interest fee consumed almost one third of a borrower’s income, leaving him with no choice but to renew his loan or borrow once again.

There are some facts that have been collected over a certain period of time and which give us a fair idea of the on-ground reality.

·         It has been estimated that over 12 million people use payday loans in all its forms, annually.

·         Although payday loans are considered to be short term solutions for unprecedented expenses, this is not the reality. Borrower’s spend at least 525 pounds on an average by way of interest and are in a state of debt for at least 5 months in the year. Almost 70% of the borrowers use these loans for paying off their bills whereas only about 15% use these loans for unprecedented expenses.

·         Almost 50% of the times that payday borrowers take out a loan, they are in some sort of financial trouble and have a problem meeting their monthly expenses.

·         Payday loans are in general unaffordable. There have been several studies which have proven that a majority of the payday borrowers are able to afford only 40 pounds on an average with the time period of two weeks and only about 16% are able to afford the average lump sum amount of 400 pounds.

·         More than 40% of the payday borrowers require some kind of financial assistance in the form of a tax refund or help from friends and family to pay off the payday loan.

·         If payday loans didn’t exist, a majority of the borrowers have said that they would cut back on their monthly expenses, would not delay paying their bills and look at less risky forms of credit such as selling or pawning possessions. This number represents a staggering 80% of the borrowers.

·         In states that have restricted laws pertaining to the freedom of payday lenders, there is an evident net decrease in payday loans. Rates of online borrowing also go hand in hand with the laws pertaining to payday lenders store fronts.

·         There is a conflict of interest when it comes to borrowers regarding payday loans, as a majority of the borrowers say that payday lenders have taken advantage of their financial situation and there are also a majority of them that say that they have provided relief. This has been shown in 2 independent studies.

·         The verdict though is unanimous. More than a majority of the borrowers feel that the regulation of payday loans is needed.

Just from this analysis, the results that can be clearly seen are as follows:

·         Surveys and market research depict that any amount exceeding 5 per cent of the borrowings is something that borrowers cannot afford. Higher payments than 5 per cent should be prohibited unless lenders prove that the borrowers are capable of borrowing a higher amount.

·         Ensuring that borrowers are able to repay the loan amount in installments, which is where 3 month payday loans can be most beneficial, and in addition to that, also ensure that the loans are structured according to the ability of the borrower to repay the loans and also ensure that they are protected against driven refinancing, excessively long loan durations and abusive collection practices.

·         There have been several acts that have been passed including an act in 2010 that allowed payday borrowers to pay off their loan amounts in equal installments over a period of time and at the same time also have the option of repaying the loan before the stipulated time, without any penalty charges.

·         A majority of the borrowers have stated that instead of the complete elimination of the industry, if there could be stricter laws that allow the payday borrowers a significantly less chunk of their income and also have the option of paying off the installments over a period of time in equal installments.

All these recent revelations have proven that there needs to be a more responsible stand taken by the regulatory body responsible for the regulation of this industry and at the same time, there needs to be more accurate information being given to the borrowers. This means that the lenders also need to adopt friendlier measures to ensure that borrowers are not cheated and they should welcome the regulations as imposed by the regulatory body. However, this is not the case. These new regulations as imposed by the Financial Conduct Authority and the restrictions imposed by the states have seen the exit of a majority of payday lenders. There are only a handful of payday lenders who have agreed to abide by the standards as set by the financial ombudsman. This also implies the increasing dependence on the alternative lines of credit, which could prove to be less risky and work towards building a more secure future for the borrower.

Whether these regulations lead to a complete elimination of this industry is something that is yet to be seen as the few payday lenders have introduced new lines of credit to their portfolio which includes other types of installment loans and so on.

Payday Loans No Credit Check

It is not entirely uncommon, for most of us to be faced with emergency situations in which we are not able to meet our current needs financially. These are some of the most stressful times that one can go through. Even when a person has a stable job with a regular monthly income, one might still end up in need of extra cash due to occurrence of unpredictable events. It happens to the best of us, it would be a pipe leaking in the basement, the fridge crashing, or your car breaking down, no one sees these kind of expenditures coming. This is where Payday Loan direct lenders step in so that you are able to have access to the money you require, but do not have.

Payday Loans no credit check are short term loans, and are also known as check loans or cash advances, these loans are usually for 500 pounds or less. They carry fees of about 10 pounds to 20 pounds per 100 pounds that is borrowed, according to the Consumer Financial Protection Bureau.  One must first know that amount that he requires, and whether you are able to repay the loan before applying for it. It is not recommended by financial experts for people who are struggling with long term debt.

Applying to a bank for a regular loan, usually has a long procedure. You are required to meet a number of requirements and have in place all your paper work. Once you have gone through with these often tedious procedures will ones loan be approved sanctioned. One may also have bad credit due to missing out on your payments on your current account, mortgage or loan. Bad credit rating makes it hard for a person to keep a bank account, let alone apply for a loan.

When in need of Payday loans no credit check, the person concerned writes a cheque, in this cheque he includes the amount that he is borrowing as well as the fee that is charged against the borrowed amount. The loan is then processed to the person minus the fee. The cheque that is given by the borrower to the lender is not cashed in, the lender holds on to the cheque. Then on the person has the duration of the maturity of his loan to gather his funds. If he is able to do so, he may directly make a payment to the lender. In case this fails to happen, and the person is not in a position to pay back the loan on the date given to him, the lender can go ahead and cash in on the cheque that was given to him earlier by the borrower. In this case when the period of the loan is extended or there is a ‘roll over’ the fee that was previously charged against the borrowed amount is subject to change.
It is required for the company to maintain complete transparency with its customers, for example the cost that the person would incur for the loan he has applied for. This, and the payday lenders must give you the finance charge which is the pound amount, as well as the APR which is the Annual Percentage Rate (the cost of credit on a yearly basis); must be provide in writing before you sign for the loan. This is the requirement placed by the federal Truth in Lending Act, which treats pay day loans just like any other form of credit.

The borrower has to fulfil a simple list of requirements in order to qualify for a loan. The person has to be a citizen of the UK, he or she must be above 18 years of age, in a position to provide valid personal id proof; persons concerned are also required to be employed with a regular source of income, and a fully functional bank account. Persons who are self-employed are not eligible for such loans.

Payday loans are in a position to attract and cover a larger section of society. This is because it does not employ the regular process of elimination. Payday loans do not reject outright, people who have credit histories that are not exactly positive in nature. This is unlike the functioning or regular loaning companies. Here anyone with a good credit history or a bad one can apply for a loan, as there are no credit checks.

This relatively flexible methods of functioning, of payday loans make it popular among various sections of society. You can receive the cash in hand much quicker. There are also fewer questions that are asked. In comparison to regular loans, these payday loans do not require you to do extensive amounts of paper work. This does away with the embarrassment that one is likely to face while trying to borrow money from any other source. All the needed documentation can be filled up online, it is very rare that one would be required to send in details via email, fax or in person; and this is done only when there is a noticeable difficulty in the verification of the details the borrower has provided. Further you are not required to provide any additional reference.

Credit checks are done on the persons’ history of repayments. An individuals’ credit score is a much disputed fact, and plays a big role in deciding whether you will be able to apply for a loan, or if the lender will accept or reject you. It comes in to effect when applying for a mortgage on your house, personal loans and credit card and the likes that are offered by regular banks. Credit score also plays a big role in deciding, the interest rate amount and the type of credit a person can account for. Payday loans on the other hand, do not conduct an extensive background check on every individual that applies for a loan. Once you have meet the basic criteria that has been mentioned above, one is good to go. This is what makes payday loans appealing.