The Application Stages of Installment Loans

When it comes to installment loans there are a number of checks you can expect to have to complete in order for a loan application to be granted. The process of applying for small loans online has changed quite dramatically in the last few years thanks to the introduction of the FCA (Financial Conduct Authority) as the governing body responsible for the activities of the market place as a whole. The reality is a lot of these changes have taken place ‘behind the scenes’ and as such, consumers are unlikely to notice any shift in terms of the time or requirements to complete an application. The efforts of the FCA in the last few years has not been to extend the process of approval from a customer prospective but instead to help ensure lenders are making lending decisions which are better founded. In actual fact the FCA has been monitoring and understanding the installment loans market over the course of over a year in an effort to understand where improvements could be made to the market. One of the biggest outcomes of this research was that lenders were not correctly identifying whether the requested loan was a suitable option for the customer applying and as such the FCA introduced new lending guidelines.

The new guidelines have ensured measures have been put in place to help lenders make better and more researched lending decisions when considering applications in a general sense. As such lenders now undertake a number of steps to assess and understand the credit worthiness and affordability of applicants when making their lending decision. In the process this has also caused such lenders to have to reconsider their lending products being offered and as such, many lenders have adapted their repayment terms to allow installment based lending to be a option; should it be more suitable for the applicant and their current financial circumstances.

As well as completing electronical checks of the applicants personal information, such as name and address, nowadays installment loans and the lenders who offer them will also complete manual checks if needed to understand if the loan is suitable for the customer. Employment based verification has always played a role in the approval process but nowadays this check is vitally important for the lender to validate they have confirmed the loan, in a general sense, is possible. As well as employment based checks lenders are now taking this further in that information contained in credit reference files are being cross checked against information supplied during the application, to ensure the existing credit and general commitments of the applicant are realistic and therefore affordable. The combination of these new checks mean that installment loans are quickly becoming a better choice for consumers because where loans are not suitable they are simply not being granted. When new credit of any form is given and the resource is not affordable, the consumer in question only ever ends up in greater financial hardship and this is not the aim of installment loan lenders.