Post financial crisis of 2008, the unsecured lending market of the United Kingdom witnessed an expansion. The market continued to expand to meet the demands of the consumers. However, with the evolution of technology, an increasing number of individuals became tech-savvy and led the traditional lenders to revolutionise their lending platforms. Soon, the brick and mortar lending shops in the streets of the UK were shut down and lenders moved online to offer financial help to the individuals according to their convenience. Since then, the lenders put their focus on the ability to target the unmet consumer demands and developed the right mix of financial products. Many lenders took advantage of the customer needs and charged an astronomically high rate of interest on the loans. Consumers were exploited due to lack of regulation in the market.
In 2013, a financial regulatory body – the Financial Conduct Authority (FCA) was introduced that have helped shape the unsecured lending landscape significantly. The watchdog’s constant intervention to safeguard the interest of the consumers is commendable. Payday loans and doorstep loans were major concerns for the body. The FCA introduced capping on payday loan interest rate and charge in 2015 and since then, many big players of the industry have shut down their operations. Wonga was the biggest payday lender in the UK, which was closed in August 2018. In 2019, many others went down – QuickQuid, and PiggyBank because the FCA received complaints of mis-selling of loans. Let’s us briefly explain about doorstep loans.
A doorstep loan is an unsecured loan that an individual can apply for and they will get the loan at their doorstep. An agent from the lender’s office will visit the applicant to help them understand the whole process and if the borrower accepts the Terms & Conditions of the loan agreement, the executive will hand over the cash to them at the comfort of their house. They do not need to stand in a queue for hours for getting a loan. Also, the executive will visit their place every month on the repayment date to collect the payment. This financial product is suitable for people who are differently-abled or senior citizens. However, this financial product is not regulated and hence, borrowing it is not always the safest option.
Whether you need a Doorstep Loan for 12 Months, or you need a loan for 2 years – go for online loans. These are nothing but unsecured personal loans that are available online. Many lenders who are authorised by the FCA offer a wide variety of loans online such as wedding loans, holiday loans that you can use for your needs. As they are authorised by the financial regulator, you can be assured of no scam and frauds. If you do not deal with an FCA authorised lender or broker – there are chances that you may end up in a debt trap.
Online loans can be applied in the comfort of your home. You can compare the available rates of interest being offered by different lenders and make your decision.
Consumer lending is a vital segment of the financial sector. Lenders have broadened their product base to attract new customers by adapting to new technology and development. For example, rather than offering only payday loans, lenders are now offering various instalment loans. The number of lenders is increasing in the financial market and hence, there is always a competition to offer a competitive interest rate to the consumer. Listed below are some substantial changes carried out by the lenders to provide a fair and responsible borrowing platform to the consumers:
Taking out a personal loan is a big financial decision. If you have a permanent and stable source of income, and you think you can easily afford the repayments without any fail – then you may consider taking out a loan. Because if you fail to repay the loan on time and in full, your credit rating will have a dent that is not looked at in a good way by the lenders or any other financial institutions.
Look for lenders or credit brokers who are registered by the Financial Conduct Authority and check their details on the Financial Services Register. Do not ever deal with a firm that is not registered by the watchdog – it may be a fraud or scam.
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