Short Term Loans History

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Short Term Loans History
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When it comes to short term loans and any form of
borrowing it is important to ensure the resource
selected is genuinely affordable. In the modern
day market place for short term loans the lenders
who exist are more focused on responsible lending
then has ever been the case before and as such
the loans being offered are designed around this
principle. As such customers considering short
term loans for their short term borrowing needs
now also need to take accountability for
borrowing in a manner which is sensible and
realistic. In the past short term loans were
considered to be a last resort for many
consumers, who in reality, were already
struggling financially. As a result of this the
limited selection of lending resources offered by
the vast number of lenders available meant that
many consumers were placed in a position of
increased and costly debt.
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Over the years short term loans have evolved in a
number of ways thanks to the introduction of the
Financial Conduct Authority as the regulating
body responsible for the operations of the short
term loans market as a whole. The Financial
Conduct Authority or FCA as they are commonly
known, took time to perform a detailed and
in-depth review of the market to see where
improvements to this difficult market place could
be made. Through their extensive research it
became evident that the short term loans on offer
were not realistically able to meet the needs of
their customers and as such, were not lending in
a responsible manner. The FCAs findings meant
that in more recent times the short term loans
market has adjusted not only their entire
approach to lending but also the way in which
loans are lent to customers.
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What the FCA uncovered was two-fold, firstly they
concluded that the product being offered was too
expensive and not suitable in the majority of
cases. Secondly it became evident that lenders
were not accurately and realistically assessing
their applicants to ensure the loans being
granted were affordable. With the support and
guidance of the FCA the way in which the short
term loans market operates has now changed. In
the past the vast majority of lenders operated a
lending resource based on the understanding that
if approved, the customer would repay the entire
sum as a single and lump sum repayment. In
instances where the customer was not able to do
so, they were instead offered the ability to
repay an interest based repayment, typically
known as an extension, to delay the single
repayment for a month. Nowadays short term loans
are considered more flexible because lenders
offer repayment terms designed to be repaid over
a number of instalments, should the customer wish
to do so and if financially, it is more suitable
for the applicant also. This means short term
loans can be split into repayments over 2, 3, 4
or 5 months, with a host of other terms also
being made available. The approval process is
also designed to better understand the customers
existing finances and how a new loan would exist
alongside this.
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