What are Direct Payday Loan Lenders

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In the current market for online loans there still exists two very different types of companies. The first group consists of direct payday loan lenders and the second of loan brokers. These two sets have existed alongside one another for an increasingly long time. The market for online lending first came into play about a decade ago when it was introduced as an alternative to mainstream borrowing. Before the internet became such a massive part of our everyday lives consumers would conduct banking matters mainly with high street resources such as the bank and storefront lenders. As the internet became more and more involved in how we run our daily lives, it is little wonder that this particular resource also followed suit. There is no doubt that these loans have played a large role in the management of consumer finances over the years but it is important for consumers to remain aware of exactly who they are dealing with. Many consumers have used an online loan at some point over the last decade and therefore are likely to be aware of what the actual product has to offer. That said the product being offered in the current market is very different to the previous offerings of lenders. One thing that does remain constant for the time being at least is the two types of lenders mentioned above.

Direct payday loan lenders and brokers both offer a facility to obtain a small loan. The application is online based and remains very similar to the original format introduced all those years ago. The process for applying usually takes no longer than 10 minutes and most lenders are able to provide a decision within a matter of hours. These applications are designed to gather all the information required by the lender to make their decision without having to communicate with the applicant in the majority of cases. As a result the process is widely considered as fuss free and straight forward. The integration of the internet into our mobiles, tablets, laptops and desktops means an applicant can submit an application to a lender when it suits them best. Of course this is very different to the old methods of borrowing which meant a visit to the bank or storefront lenders or calling to obtain a loan from the bank over the phone. If approved the customer can expect to receive the loan into their accounts that same day.  

The actual product being offered as mentioned above has changed quite dramatically over the years. In the earlier stages of the markets life lenders only really offered one type of product, commonly known then as a payday loan. These loans offered consumers the opportunity to borrow a small amount of money, usually between £100.00 and £500.00 and if successful would agree to repay the total balance on their next employment pay date. This meant committing to quite a large amount of money being repaid in one lump sum. The interest applied to the classic style of lending usually worked out to be about £30.00 per every £100.00 that the lender approved, meaning a £300.00 loan would cost the consumer £390.00 if repaid on their next pay date. Many consumers found this format expensive and instead decided to use the alternative repayment offer made by the lender, known as an extension. An extension allowed the consumer to repay the interest part of the agreement and in doing so extend the total repayment until their pay date. So for a £300.00 loan this typically meant a repayment of 90.00 and then the full £390.00 was due in a months time. Many paying extensions found themselves trapped in a cycle of debt and continually repaying interest, unable to reduce the amount they owe. It is of little wonder then that the product being offered changed to instalment loans. Being that consumers can select to repay the loan at an affordable rate and interest is charged daily, these type of loans are increasing in popularity day on day.

Direct payday loan lenders and brokers alike offer the products mentioned above. There is however a massive difference between the two. Direct payday loan lenders are the ones who lend you the money and who you will have to pay back. Brokers simply bring a lender and borrower together.

 

By Kieran Moulden