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Seven Easy Ways To Facilitate Same Day Loans
How affordability is assessed for payday loans
Short term loans are designed to offer a service which allows small time borrowing to take place, in a manner which is realistic and affordable to the applicant. In order to ensure this true, the lenders of payday loans need to conduct a number of different assessments and one of which is focused on the applicant’s true ability to afford the loan; also known as an affordability assessment. The affordability assessment element of the application is a relatively new requirement and it has fundamentally been brought about due to new rules and regulations which now govern the operations of the payday loans market as a whole. Since early 2014 the Financial Conduct Authority, also known commonly as the FCA, have been in charge of this market place. The core task of the FCA was to review the payday loans lenders and understand how exactly they delivered their lending options to customers. This was not only in terms of the actual application and approval process but also looked at understanding how loans we managed and subsequently repaid.
Through their research the FCA was able to conduct that payday loans lenders were simply not accurately addressing and serving the needs of the customers who used the loans they offered. What the FCA then uncovered was the obvious fact that many lenders didn’t then know how to correctly and fairly support the needs of customers who later fell behind with repayments. In order to remedy this the FCA used a combination of their research and their core values, to deliver new rules and regulations to the payday loans market and its lenders. Whilst many may believe this move was to force lenders out of the market; the reality was that they simply did not want those poor lenders to remain if they were not willing to make sensible and much needed changes. The end result of the FCA’s new rules, same day loans and guidelines was that the lenders which exist in the market today, are all fully regulated by the FCA and operate to serve customer needs in a fair and considered manner.
In order to achieve this, as touched on above, lenders needed to adapt or fully change many elements of the overall product and service they offered and one such change was how they considered affordability in relation to each potential customer. Changes which have been made with regards to this focus on better understanding the applicants previous and current ability to maintain credit as well as how a new commitment would ‘sit’ alongside such commitments. This is achieved through more in-depth analyst and review of the applicant’s credit reference file information as well as their current day budget; meaning their income and expenditure on a normal month. By understanding this data and combining it with flexible lending choices and established rules in terms of the requirements to be approved for a loan, the current day payday loans lenders are a much more suitable and customer friendly resource than ever before.
