The latest wave of payday loan lenders have come from leftfield in recent years and changed the perception of the industry, as far as the untrusting general public is concerned. It would have taken something dramatic to change the perception after years of abuse from some of the top names in payday loans. People were used to seeing headlines and stories about how payday loan companies were fleecing the everyday borrower, making it harder and harder for people to pay back short-term debt, leading to a snowball effect of bad debt, higher interest and missed payment penalties. If you had taken out a payday loan it might take you years to pay off a sum of money that was only meant to take a few months to pay off.
How have things changed within the payday loan industry then?
For starters there has been tighter regulations from a government level. This ensured that all payday loan companies must become much more transparent than they ever were before. There is now a cap on the amount of interest that can be placed on any payday loan figure, and short-term loan lenders must now also help individuals who are struggling with debt, guiding them to free debt advice services and allowing flexibility in how customers manage payday loan debt and repayment strategies.
One of the biggest changes in the industry is with the transparency and speed of the application process. Things move at a much faster pace these days than they ever did just a few short years ago. The modern payday loan lender lays everything out from the very first moment a potential borrower clicks on to a payday loan company website.
It should be straightforward to make an application, and a website should guide an applicant to an online calculator with a clear demonstration of how your payday loan will work, including all relevant fees and interest fees up front. You should never be in the dark when it comes to the amounts you are going to pay back on your payday loan, or the time limit with which you have to do so. If you choose a longer period of time to pay back a loan (via a flexible instalment loan) you will have to pay more interest in total but you might have lower monthly payments as a result.
Alongside that the process is as fast as possible, with responsible lending only to those applicants that can demonstrate they have the means with which to pay back any payday loan borrowed, and most applicants receiving the money within just a few short hours of the application form being filled out on the website. It is so fast and effective that it makes a massive difference to the poor customer service and attitudes towards borrowers from the payday loan companies of the past. Not only that, but with clear communication channels, struggling borrowers with a change in circumstance can ask for payment holidays or restructuring of payments when faced with uncertainty or a loss of employment.