Are these really Payday Loans?
No they are not!
We aim to offer our customers loans that we would want ourselves. All of our staff have a deep understanding of the Payday Loans industry and the Instalment Loans industry. We have all worked for Payday Loan Lenders in the past and truly understand the ruthlessness of that section of the market.
We know that fundamentally a payday loan does not work. In theory it is a great solution with a customer borrowing a small amount of money until their next payday and paying it back with interest. Nothing wrong with that at all, and this is how it was back in 2006-2009.
Where things start to unravel was when the industry grew and the demand for leads increased. The lead generators, or brokers, who run a sort of auction system for each lead, found that direct lenders would pay more and more for each lead. This has continued right up until the present day where it is not unusual for direct payday loan lenders to be paying £60 or more for every lead. Back in 2007 the going rate was £15 per lead so you can see how the costs have increased. Of course not every lead will be converted, even if we calculate that 50% are converted you can see that the acquisition or marketing cost of each lead is as high as £120.
On top of the increase in demand and prices paid for quality leads, the cost of undertaking credit checks has increased as well. I guess that most direct payday lenders are spending in excess of £40 to credit check each loan.
So it is not unconceivable that each new customer is costing a payday lender £160 just to lend to that customer. Even if we ignore all the other costs that a payday lender has, if they are paying up to £160 just to acquire a customer they need to keep that customer for longer than 1 month in order not to lose money.
This is where the roll-overs or extensions started. If a lender can keep a customer rolling over and only paying the interest each month, then the lender can start to make money. I believe that a payday lender needs to roll over a customer 3 times just to break even.
So fundamentally the product – payday loans does not work.
Instalment loans are completely different in that they are designed to last for multiple months and so right from the start the instalment loans companies are being fairer to the customer. We have similar costs to payday loans companies (although True Blue Loans is so popular that we do not need to buy leads from Brokers) and so are shortest loan is a 3 month loan, then a 6 month loan and finally a 9 month loan.
We start with a 3 month loan as this is when we have covered our direct costs, although a customer can pay us back at any time without any penalty. We only charge daily interest and so a customer only pays interest up to the day they pay us back. You can see from the chart below that monthly repayments are affordable. A £300 loan taken over 9 months has repayments at less than £100 per month.
One of the main advantages of an instalment loan over a payday loan is that they have affordable monthly repayments. They are still expensive and could never be called a cheap loan, but they are affordable in that there are no money transfer fees, no application fees, no immediate late fees, just daily interest. Each monthly payment is fixed and the same as every other month (there may be a slight difference to the final payment just due to rounding figures).
We honestly love our instalment loans; we feel that they are open and honest, they are exactly as described. We are proud of our company – True Blue Loans.
There are many different types of loan, and we will try and explain the difference between them below.
Payday Loans. Payday loans are designed to be repaid by the borrower on their next payday. It is not designed to be kept for more than a month and is not an instalment loan.
Payday Loan UK. This is a payday loan which is for UK consumers, people who live and work in the UK. The UK consists of England, Northern Ireland and Scotland. A payday Loan UK must be repaid whilst still living in the UK.
Online Payday Loans. This is a loan that is completely handled online. An applicant would apply for an online payday loan via a computer, tablet or smartphone.
Storefront Payday Loan. This is the oposite of the online payday loan, these loans are offered by shops and customers go into the shop and borrow the money. They then revisit the shop to make payments and also to reborrow.
Loans Direct. These are typically where a customer will deal directly with the actual lender rather than go through a broker or introducer. There is rarely an advantage in going through a broker so these loans are very popular with a lot of people searching for Loans Direct.
Payday Loan Lenders. As the name suggests Payday Loan lenders are the companies which actually lend the money rather than being brokers or introducers. Payday Loan Lenders will be able to make the decision if they are prepared to lend or not.
3 Month Payday Loans. There really is no such thing as 3 month payday loans, it is of course really an instalment loan. An instalment loan is a loan which is spread over more than two months.
Wonga. This was a slang for money until the term was adopted by the company called wonga.com and now the term wonga is searched more than the term payday loan.
3 Month Loan. A great length for an instalment loan, being more than a payday loan and not too long that the repayments are spread too thin and too much interest is paid.
There is no need to break the piggy bank with an Instalment Loan from True Blue Loans!
Short Term Loans Have A Number Of Benefits
While the negative elements pf payday loans are well known to most people in the United Kingdom, it may be the case that the positive elements are not too well known. It is easy to see why the media is looking to focus on the negative element of these loans but a great number of people around the UK have benefitted from having access to a loan of money over a short term period. It is important to point out that these loans carry a high APR, but for many people, this is a fair price to pay for the comfort, security and flexibility that is on offer.
One of the first things you will find when applying for short term loans is that they are easy to apply for and most people will qualify for some form of loan. Most payday loans will limit the amount of money that can be borrowed to your earnings, which means that most people will not be able to rack up huge debts. This is an important aspect and it indicates that payday loans have a responsible side and attempt to look after their customers. Some customers run into further financial difficulties which will impact on their ability to pay off the loan on the date they should but on the whole, the vast majority of clients receive a loan amount that is within their means.
The ease of application is of considerable benefit to the amount of people who struggle with the forms and lengthy processes when taking out a bank loan. Anyone who lacks confidence in dealing with financial matters will often look for alternative solutions as opposed to talking to a bank. This is unfortunate, and something that the banking industry should review, but there is an option for people to try a different route. The simple nature of the payday loan application process should ensure that people are able to apply for what they need in a quick and convenient manner.
There is convenience to short term loans
When it comes to quickness and convenience, it is hard to argue with short term loans. The ease of the application process should ensure that people can apply in no time at all. There is also the added benefit that a number of payday loans aim to process applications in a short period of time. When you are waiting on results from a financial institution, it is a very stressful time. This is where knowing you will receive a swift response helps to remove a lot of the stress and pressure that people commonly feel. Difficult financial situations are often stressful enough without adding to the situation and this is where obtaining reliable and fast service can help people to stay calm under pressure.
Another way that short term loans are fast comes with the speed with which they are paid into your account. Given that many applicants will apply for a short term loan when a financial situation arises at short notice, there is a need for people to get help fast. Some of the biggest and most reputable short term loan companies are able to provide a client with funds five minutes after their application has been approved. This means that even if there is a financial emergency to contend with, people will be provided with the correct level of support and assistance to take care of what needs to be taken care of.
You should also find that reputable payday loan providers will offer a high level of customer service. Given the importance of financial transactions, it makes sense to feel comfortable and confident about what is made available to you. This is where you need to take all the help you can get and a good firm understands this. This is why you should review a site for the customer support options they provide to clients. A firm which doesn’t offer enough customer support options should not be trusted.
Representative Example: Representative 2108.81% APR on a loan of £200.00 with 6 monthly repayments of £67.62. Total amount repayable £405.55. Annual interest rate (fixed) 348%