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Financial Wealth Uk

Updated on April 12, 2015

Emergence of Payday Loans in the United Kingdom

The world economy has taken a substantial hit during the first decade of the 21st century. Through a stagnant point of decline which saw the recession spreading across the globe, the recovery has been rather lively since 2012. The signs of an upward curve for the United Kingdom can be seen from 2013. The consumers have been hurt the most by the economic turmoil and the recovery must be laid out by them as well.

There have been several fluctuations in the UK consumer credit sector during the ups and downs of the economy but key factors in the wider economic developments have assisted in the growth of consumer credit trend in the UK. The introduction of new loaning products, or more appropriately, the re-embracement of loan products with greater affinity by the customers has given rise to this new trend in the UK consumer credit industry.

The increasing popularity of payday lending in the UK is largely due to the impact of the recession upon traditional lending using credit cards, automobile financing, mortgages, personal loans, etc. With high unemployment rates and high interest rates, consumer confidence has been largely reduced to the likelihood of investments. This has given rise to loans which are unavoidable in the student loans and fast cash loans form of payday loans.

This growth in the payday lending industry is largely due to consumers trying to cover uprising costs of education and living costs. While there is a rise in costs, there is a stagnant rise in income, if so. Consumers with bad credit due to loan defaults, utilities back tracking, and other financial constrictions have caused them to be rejected by traditional bank loans. This new trend in the finance industry for leaning towards unsecured fast cash is of concern to financial experts and consultancy agencies alike.

There are a wide variety of payday loan service providers available, mostly online. This rise in online fast cash lending has simplified application process and approval process for consumers. Consumers are able to apply easily to multiple loan service providers such as Fast Loan Solutions, and able to get instant feedback on approval or even same day funds transfer. They are able to see both the advantages and disadvantages of lending services easily and more efficiently.

Like any other trending products, the attractive features are highlighted to pull consumers into these lending services. The easy to use instant application process and fast decision for approval and/or immediate funds transfer attract customers. The eligibility requirements are simplified and easily attainable by applicants. All United Kingdom residents who are over 18 years old are eligible to apply. However, they must also be employed and/or have some source of steady income.

In addition, these loans are unsecured loans which require no security on the part of the borrower as the proof of income is sufficient to provide them with a fast cash loan. Most users are low income strugglers with bad credit for whom this is the ideal solution since they are unable to apply successfully for traditional loans. Although, these fast loans offer high interest rates, they are more often than not successful transactions for both lender and borrower.

There are security measures on place for maintaining responsible lending actions of both the borrowers and lenders. These ensure that commitments are fulfilled. Government regulations are placed upon the lenders to evaluate and assess borrowers for credibility since a credit check is not required. The Financial Conduct Authority (FCA) effective 1 April, 2014 has taken stronger hold of regulations to ensure borrower security. This is largely been done to avoid lenders from abusing their lending rights and saving potential borrowers from spiraling into further debt using the payday loans.

There are additional voluntary organizations which assist those who are in need of permanent debt solutions. As payday lending service companies such as Fast Loan Solutions can only provide a temporary solution, these organizations support debtors with money management. Formerly known as the (CCCS) Consumer Credit Counseling Service, the StepChange Debt Charity operates to provide financial consultancy by experts.

Consumers who are looking for permanent debt solutions may consider contacting the National Debt Line for further assistance prior to committing to payday lending services.

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