In days gone by, borrowing money at short notice would mean a visit to the bank, cap in hand. Or maybe a pleading phone call to family or friends to ask if they can help you out until pay day.
Nowadays, things are very different. You can have significant sums of money sent straight to your bank account after few clicks of your mouse and with absolutely no interaction with an actual human being. It almost sounds too good to be true. In reality, unless you are pretty clued up on finance and credit and know what to look for and what to avoid, it probably is too good to be true.
Anyone can find websites promising decisions and money in minutes. All it takes is a few key words typed into Google and hundreds of results pop up on your screen. Many of the sites that you’ll find will have online application forms which are very simple to fill in. But what you may not realise, is that as you fill in your details, the site you are using may just be a ‘lead generator’ for lenders. This type of marketing is known in the industry as the ‘Ping Tree’ – a name made up by software developers which derives from your details literally being ‘pinged’ from lender to lender.
Your details pass from site to site, each time earning the original website commission. Depending on how ‘attractive’ a customer you are to these lenders, by the time your details have pinged to the bottom of the tree, they could have been sold to hundreds of other sites. If you’ve entered bank details, you may have even been charged fees by unscrupulous ‘brokers’ who probably haven’t even found you a loan. If they have, it’s likely to be with whichever lender paid them the most commission and could well be the worst deal in the market.
However, don’t let this put you off trying to find the right loan for you online. It IS possible to get a good deal from the comfort of your armchair, as long as you’re careful.
Before you enter your details and apply online for anything, read very carefully about what you are actually applying for. Make sure that the company you are using charges NO UPFRONT FEES.
Make sure you are given a choice of which loan to go for. A decent broker will first take the time to find out what your needs are and what your situation is, before searching many different lenders to find you the best deals and present your options to you.
If you have more than one option available to you, it’s up to you to choose the one which suits you best. It’s a good idea to look at how much you’ll end up repaying in total at the end of the term, to find the true cost of the loan. A decent broker will be able to give you these details and the best brokers won’t charge you anything for doing so. They earn their money from commission directly from the lender, so it won’t cost you a penny.
A report released earlier this month by the FCA (Financial Conduct Authority), reviewing the first 12 months of their regulation of the controversial ‘Payday’ loans market, found that many lenders were not acting fairly to customers. Those who had fallen behind on payments were exposed to “unacceptable” practices which included lenders offering inflexible repayment options and failing to direct borrowers to free debt advice. The FCA said that they had intervened quickly where such failings were uncovered and are working with lenders to “find appropriate levels of redress for those affected”.
However, on a much more positive note, the report also revealed that over the last 12 months, the industry was taking a more customer-focused approach to lending. It’s this customer-focused approach which you need to look for when trying to find an online loan. So be savvy and make sure you read the small print before signing up to promises of ‘money in minutes’.