What Makes a Responsible Same Day Loan Lender?

April 21, 2012 by  Filed under: Loans 

The ethics and responsibilities of same day loan companies are often called into question, usually as a result of their open lending practices and higher rates of interest. As a result, some consumers may question who they can truly trust, resulting in confusion and possible mistrust of the industry as a whole. However, this isn’t necessary. There are a number of things that differentiate responsible lenders from the rest, a few of which are listed here.

1. Straight talking

Honesty is very much the best policy when it comes to same day loan companies. The more information that they are willing to share, the easier it is to trust what they have to say.

For example, everybody is aware that there are certain costs involved with taking out a loan. For most applicants, being able to calculate exactly how much they are going to be charged is only going to encourage trust. Lenders that deliberately conceal costs or aren’t able to offer a clear breakdown (preferably on the home page) may not be entirely responsible.

2. In-depth information

Continuing this trend, it is also important that the details same day loan lenders offer aren’t just easy to understand but are also in-depth. After all, if you want to find out information about a company or the services that they offer, you don’t want to be left with more questions than answers.

If a loan company appears to be evasive or offers only limited snippets of information, this suggests (rightly or wrongly) that they may have something to hide. It is their job to convince potential applicants that they are trustworthy; if they fail in this most basic of tasks, then it’s difficult to see how they can be a responsible lender.

3. Links to external financial bodies

To continue the theme of openness and honesty, most reputable same day loan companies will often choose to link to related financial bodies. This allows customers to go and carry out further research through an alternative, independent source. Again, this demonstrates that they have nothing to hide and are willing to offer details that others may hide.

4. Risk v reward

You are probably already aware of why you’re applying for a same day loan; however, you might not be fully versed on the potential risks involved with this form of borrowing. Whilst this is covered by the above points to a certain extent, it is the job of the lender to outline the costs, late charges and other potential issues that may possibly arise.

Short term borrowing should never be used as a long term solution and any company that suggests otherwise ought to be treated with caution. The risks should be presented just as clearly as the potential rewards, perhaps even more so. After all, as payday loans are available to most people, there is greater potential for those who can’t really afford the repayments to get their hands on money.

5. Employing checks

Whilst some lenders deliberately avoid credit checks as a method of evaluating applications, other methods ought to be used instead. For instance, the amount of money somebody takes home will often become one of the most prominent factors. Those who demand a higher wage, often around £750 a month or higher, will often take greater care to ensure that applicants can afford the loans that they are seeking.

6. Setting limitation for first time applicants

Not only does this protect the same day loan companies from lending too much to the wrong applicants, it also helps to ensure that people don’t borrow beyond their means initially. We don’t always make the most prudent choices when seeking money in desperate circumstances, so having this safeguard can help borrowers from getting into undue difficulties.

Vincent Rogers is a freelance writer who writes for a number of finance businesses. For Payday Loans, he recommends Payday Power.

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