Feb 05, 2014 Philip Burgess
Critics of the short term lending industry in the United Kingdom tend to attack the sector on a few key focal areas. One of the most harped-on subjects is that consumers can drive themselves into more debt by taking out these alternative credit options without being able to pay them back. While common sense would note that this is not the fault of the lending company, it's still a point of contention with some lawmakers.
As such, a number of short term lenders have continued taking the same stance they have adopted for some time - consumers need to be more educated about their financial options.
The fact of the matter remains that these types of loans are still better than a lot of other products given by more traditional lenders and even high street banks - after all, they tend to impose much more stringent rules on who can be approved for application. Many times, individuals with less than perfect consumer credit scores can't find financial help from traditional types of institutions, unlike alternative finance companies.
As such, workers need to make sure their clients are aware of the rules and fees that accompany taking out a loan, as well as best practices. A recent report issued by the Competition Commission revealed that one-third of short term loans aren't repaid on time, and half of all first-time borrowers have to roll over their loans because they can't pay or are unsure of the regulations, according to The Independent.
"The new report suggests that a bulk of borrowers don't know what they're doing when they turn to high-cost credit," the newspaper stated.
So as not to fall prey to critics' arguments and, more importantly, to better serve customers, lenders need to make sure they're providing their clients with the most up-to-date information. Perhaps this will show detractors that the industry is a valuable one and definitely has a place next to its more traditional counterparts in serving individuals across the U.K.