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How to understand affordability and payday express loans

For many years now consumers have been able to access loans online for small sums of money. These loans were introduced in a time when the internet started to form an integral part of our everyday lives and therefore it is of little wonder that this type of easily accessible lending formed part of that culture. Consumers were drawn to the quick and discreet nature in which an application could be submitted online and meant consumers could consider their lending options at a time which was entirely suitable to them and their normal working day. Before this type of lending became popular consumers were much more limited in terms of the lending resources which were available to them. In reality lending of any kind had been limited for a number of years when compared to the modern day needs of customers. Although the more traditional lending solutions remain popular today, such as a credit card provider or a bank or building society, the method for obtaining these type of loans meant that as time has passed a new resource able to meet the fast moving needs of consumers was needed. These more classic lending resources see consumers have to complete a longer and in some respects more detailed application process often reflective of the amount which is being borrowed. Given these loans support customers looking to borrow thousands of pounds, rather than the sums in the hundreds, typically now associated with payday express loans, the checks must be focused on a longer period of repayment.

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With all of the above in mind it is not surprising that the modern day consumer can use payday express loans as a useful short term lending resource. In fact if used as intended, consumers can benefit from the quick and simple ability to access a small loan. The key with this type of borrowing is the ability to understand if the loan is in fact affordable. The loans themselves were introduced not only to meet the changing demands of the modern day consumer but also to ensure unexpected financial commitments could be dealt with quickly and with little stress. Given the typically higher interest which is linked to this type of borrowing, a consumer should never be using the resource as a long term solution. In fact in the early days of the market the type of product offered was designed to specifically only be borrowed until the applicants next employment pay date, this meant borrowing for up to a 31 day period. 

As the years have passed it has become more apparent to the modern day lenders that in order for the product being offered to remain affordable, the term of repayment must be more flexible. Lets look at an example to represent this (This example is not an example of a Payday Express loan but uses industry typical figures). Take a customer who faces an unexpected vet bill of £300.00, and as with most unexpected bills, there was no ability to plan for this expense in advance but the requirement to repay is immediate. With the traditional payday express loans a customer borrowing this amount would more than likely be a due a repayment of £372.00 on their next pay date. If this customer typically had normal monthly bills of £1000.00 and earns £1250.00, this means their average level of disposable income, which can be spent as they wish is £250.00. Although this amount is enough to ensure luxury purchases such as a meal out, take away or a new pair of shoes is absolutely possible, a £372.00 loan repayment would have been too large a commitment. It is examples exactly like this that saw consumers choosing the previously offered option to extend their short term loans on a regular basis. An extension allowed the customer to repay only the interest at what would have been £72.00 on the agreed date, and delaying the £372.00 until their next employment pay date. That was of course if the lender had assessed the extension as affordable and allowed the borrower to take it.

Nowadays consumers can choose from a better selection of repayment terms offered by the payday lenders. Many offer a number of repayment terms which allow the customer to better select a repayment which fits in with their normal living expenses. Whether this be a 3 month repayment term or anything ranging up to 12 months, the consumer has the option to borrow more wisely and in a controlled manner.


Express payday loans and how affordability is important


It is always very important that when a loan is taken out the repayments due under the agreement are affordable and that the individual can comfortably manage these repayments. Missing loan repayments can always result in severe negative consequences for the person involved and this is something that person would definitely like to avoid. To help them understand whether a loan is affordable a customer should firstly know that they need the loan in question and then they must select a realistic amount for them to borrow. They must then select what kind of finance it is that they require such as the payday loan, instalment loan, possible car finance or lines of credit can readily be available for people to obtain in the financial market place. This is always worth taken into consideration as well as the lender chosen. There are so many different lenders available for selection and each of them offer a range of positive and negative features in regards to the services and products that they as a company offer. All of the above can generally help a customer know whether the loan they are taken out is an appropriate product and is one they can realistically afford when the certain repayments become due. It will be the affordability factor that I will be discussing in the article below. For express payday loans and other ways of borrowing affording the product is really important.

Loans will always need to be affordable for a customer to manage so they know the repayments can be made for the correct amounts and then be on time and as agreed with the lender who granted the loan. To help assess whether a loan is affordable a customer can find out what their monthly disposable income is and then see if they can afford to deduct from that figure whatever monthly repayment is needed to be made. To gain this figure a customer can add up all the money expected in their bank account for the month coming ahead and this should include wages due, any possible benefit amounts and any other amount of income expected. After that is done from that total then deduct all the outgoing monthly expenditure over the same time period. This as a result should include any living expenses such as the cost for running a car as well as the living costs, other things here could include other debts they may have as well as other outgoing expense for that time frame. The figure left after this calculation will be known as the disposable income or spare income for that time. This amount will vary from month to month depending on a range of different elements however, it should give a general idea to know whether a certain finance is affordable for that person. If a person realises that they have a large disposable income on a monthly basis then they know that the finance is realistic for them to manage and should therefore be affordable for them to take out. On the other hand of the amount is lower or does not show enough to cover any loan instalments due then the loan should just simply not be applied for let alone taken out. There can be finance companies that ask the customer to complete their own type of income and expenditure to enable both themselves and the customer to see whether the financial product can be affordable.