Anyone who is need of an urgent loan and doesn’t have a good credit score will appreciate the need for a short-term loan. Targeting short-term loans as a dangerous method of borrowing has been a constant topic in the press, now the tables have turned.
Change of Heart
A recent article on the BBC website warned about the dangers of loan sharks should the public not have access to a short-term loan. Ever since the Financial Conduct Authority (FCA) tightened up the rules on short-term lenders, 80% of all applicants have been rejected. Loan sharks are a dangerous form of alternative credit. They are unregulated and their fees and interest rates could lead working families into serious problems.
Responsible Short Term Lending
The FCA rules were introduced in a bid to cut down on irresponsible lending. While some payday loan companies may have exceeded their remit, others made it very clear exactly what the borrower would pay, the length of time of the debt as well as the interest rates incurred. Not all short-term lenders are the same. Unfortunately the new FCA rules make it harder for families and individuals to borrow money. Past credit history will mitigate against certain groups of potential borrowers. This means that even if they are in work and paying their bills on time, they will find it difficult to access funds from banks or many other lenders. Perhaps, it’s time to look again at the important function that a short-term lender can serve.