Online payday loans have been available for
many years now. In reality, online
payday loans were actually launched in the early 1990’s and as such have
become an established form of borrowing for many millions of consumers during
this time. The online nature of such loans means unlike many other forms of
borrowing, which later followed their lead, provide an ability to access funds
in what is potentially a very short and therefore effective period. Whilst
clearly these loans are widely known and used, this is not to say these loans
have not had to adapt and change as the years have continued to pass. In more
recent years specifically online payday loans have been subject to much change,
in terms of both their product and service and this is largely thanks to the
new regulator, introduced in 2014. The regulator in question is the Financial
Conduct Authority and since this date they have governed all practices of
online payday loans and their lenders.
 |
| Online Payday Loans |
For many years and before the introduction
of the FCA (Financial Conduct Authority), online payday loans were offered in a
very specific manner which ultimately became their biggest driver for change.
As many of us will be aware this product was that of the payday loan. The
payday loan offered a very simple repayment structure which saw customers
of the product agree to repay their entire loan on their next and forthcoming
employment pay date. There was no specific alternative to this repayment offer
and that meant whether borrowing for 5 days or 35, the full repayment would be
due. Whilst undoubtedly payday loans could support the needs of customers
adequately for many years, increasingly it became clear that this model of
borrowing was somewhat restricted and did not provide the flexibility which was
needed when it came to repayment options.
When the FCA were introduced this fact soon
came to live and a 2-year long process was started which would change the
online payday loans market place forever. Whereas lenders had become
comfortable offering only one type of repayment option, the reality was for
many customers it simply wasn’t suitable. Through research of how lenders
operated and how they loan applications were approved, the FCA could introduce
new practices and guidelines as to how best to treat customers. This meant
changing not only the product
but also the service. Nowadays many online payday loans lenders have moved away
from the payday loan model of lending money and instead offer loans via the
means of instalment repayments. This means instead of having to repay the
entire amount borrowed as a one-off repayment, there are options for repayment
which are available over several pre-agreed months. In the modern day, online
payday loans market this could mean anything from the classic single instalment
right through to 12 monthly repayments. Where longer terms are selected the
total amount repayable will increase so this should always be considered along
with all other factors.
No comments:
Post a Comment