The market for borrowing a small amount of money is made up of several different types of loans and also several different type of lenders. This market has continued to grow in the years in has been in operation, with millions of users turning to the resources offered ever year. \n
The market for borrowing a small amount of money is made up of several different types
of loans and also several different type of lenders. This market has continued to grow in
the years in has been in operation, with millions of users turning to the resources offered
ever year. The market in its original form was a lot more restricted then is the case found
today but at the time, the resource fitted the purpose.Short term loans, payday loans or
online loans all offer a resource which allows consumers to borrow an agreed small
amount of money for a short period of time. Before this market existed online, consumers
were traditionally used to conducting their borrowing needs through more classic means,
such as a bank loan or credit card provided.The last decade saw this change when the
online short term loan became available. Like so many sectors in our economy, the ability
to borrow in this manner helped support the evolving needs of the modern day consumer.
Increasingly the internet has become one of our most powerful and much needed
resources and the adaption to borrowing via this medium is really no surprise.
As touched upon above there are several different forms in which a short term
loan will be delivered. In the early days direct payday lenders dominated the
market. Direct payday lenders are firms who consider applications on a direct
basis, meaning the decision as to whether a loan is possible or not comes from
the company in which the application has been made. These type of lenders
remain the most popular choice with consumers for a number of reasons.
Firstly direct payday lenders typically offer a much clearer level of service.
Given that an internal team reviews the applicant’s details and makes a
decision, the ability to approve the loan comes in a timely manner and
without need for further information to be supplied by the customer. Also
these lenders do not typically charge a fee for the service of applying ensuring
the overall cost of credit is not increased.
Unlike direct payday lenders there are brokers who exist within the market for
short term loans. A broker offers a similar level of service in the respect that they
allow consumers to apply for a short term borrowing resource, however they do
so on the behalf of a group of lenders. This in simple terms means a broker will
not lend funds directly and instead will use the information provided as part of
the application to deem if they have a potentially suitable lender available. The
drawbacks with these brokers and how they vary from direct payday lenders is
in the respect that the proposed lender may still then decline the application.
Equally given that the broker is providing a service, there is often a fee for doing
so. Obviously this means the total cost of the loan, should it be approved, is
likely to increase when compared to those offered by direct payday lenders.