Many things have changed in the short term loans industry, particularly around the online lending space for High Cost Short Term (HCST) loans.
This has affected all nature of lenders including the direct lenders sometimes referred to as ‘payday loans direct lenders’ who are the actual lenders of the short term loans in question in many cases.
With the Financial Conduct Authority (FCA) having implemented sweeping new regulations across the industry, lenders are bound by various rules and regulations that work to protect both the lender and the borrower. However, although there have been numerous changes and updates, the reasons for people taking out these loans in the first place has not changed much.
There are many well-established reasons for taking out payday and other forms of short term loans and this is something likely to continue. With hundreds of thousands of people across the UK and Europe falling a little short when it comes to their monthly finances, short term loans can, when used responsibly, provide a useful safety net, used for a number of reasons.
Debt Consolidation
For many, having a number of debts can be unmanageable. It may be the case that a person has outstanding household bills, credit card repayments to make and a mortgage and with a few financial emergencies arising in a month, their income may simply not cover everything. In such cases, many people try to simultaneously manage and repay a number of bills. However, this is very difficult to keep track of, let alone repay.
Short term loans, often of up to £2,000 can provide the short term funding required to consolidate a number of outstanding debts into fewer, affordable monthly repayments. This way, the borrower will only need to focus on say two outstanding debts as opposed to four or five.
Emergency Repairs
Unpredictable emergencies such as a leaky roof, broken boiler or broken-down car can have a huge impact on one’s day to day life. For example, in the winter, a broken-down boiler will likely mean no hot water or heating, making for a potentially difficult winter. A leaky roof is not just unsightly, but can also lead to further issues with the property in question and increased damage down the line.
It is important that these issues are addressed and fixes as soon as possible. This may however mean taking out a form of short term finance such as a payday or instalment loan in order to address the issues outstanding in the short term. The loan can be funded upon acceptance very quickly and then the damage or issue rectifies as soon as possible.
In the case of a broken-down car or vehicle, if it is someone’s primary mode of transport to get to work for example, being without the vehicle can have further reaching consequences than inconvenience. Specific car repair loans exist to help take care of people with a broken-down car who require short term finding to get back on the road.
Medical Expenses
Although in the UK the National Health Service (NHS) covers the majority of costs in the majority of cases, there may be elements that the patient may need to pay for or other issues that need to be addressed directly by the patient. It may be the case that a person has been provided a wheelchair by the NHS but seeking an increased degree of comfort when using it, need to use a special cushion or pressure-relieving pillow.
In such cases, these aids can cost hundreds of Pounds, excluding many people from being able to truly afford them. A short term loan however, is able to cover the immediate costs of purchasing or leasing these required assistive aids. Then, upon receiving the loan and the subsequently required item, the patient repays the loan at a predetermined, agreed time.
