Short Term Loan

Facts About Short Term Loans When it comes to the products and services offered by short term loans lenders there is plenty of choice to consider. Over the years this market place as a whole has evolved quite considerably and as such the modern day short term loans lenders are somewhat of a completely different breed to that of lenders in years gone by. Nowadays this market place is regulated by the Financial Conduct Authority and as such, a lot of changes have taken place concerning how the market lenders are able to conduct their businesses. In reality the short term loans market had become arguably dated. For many years the vast number of lenders operating in the market offered a very similar product which was restricted in its lending options.

Due to this limited product range what became clear over time was the fact that these loans, in their previous form, were not always able to effectively meet the needs of consumers. It was the work of the Financial Conduct Authority which really highlighted this fact and as such have investigated great efforts in improving how the market as a whole now operates.

The Financial Conduct Authority or FCA as its also known conducted extensive and in-depth research of the market and the short term loans lenders who operated within it for a period of a year. Over this time there were several key points which were discovered and required significant improvement. These points were firstly the type of product being offered and its suitability for consumers and secondly the concept of affordability and its lack in terms of the application and approval process of these loan. Concentrating on the first point, the FCA discovered that the type of product being offered, was in a majority of cases, not truly suitable to the consumers using the product. This product was known as the payday loan and as the name clearly suggests, allowed the applicant to borrow until their next employment pay date.

This meant the commitment of a lump sum repayment in often what was less than a months period. Whilst for some this type of borrowing was suitable, the FCA discovered that in the vast majority of cases many customers struggled to make repayment as agreed and instead may interest based repayments not reducing the amount owed. The second point here is the short term loans lenders lack of suitable checks concerning their applicants ability to afford the loan. This meant there were many examples where loans were granted but in reality were simply not affordable.

In the current marketplace and thanks to the help of the FCA, the products and services are more flexible, offer better repayment options and are better considered by lenders. Depending upon the requirements of the individual applicant lenders now offer instalment based loans which are designed to offer affordable amounts and terms based on the needs of the customer. These changes are positive and mean the market has been able to move forward in many respects to a more fair and more customer focused existence.

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