When it comes to finding a responsible lender, there are several things to look out for. We’ve listed the main six considerations below – your lender should offer flexible options, be as transparent as possible, have good lending criteria, be fair, regulated, and perform appropriate checks.

Flexible

• A borrower should never be encouraged or forced to borrow more credit than they require or they can afford
• Lenders should let the borrower control exactly how much they want to borrow, down to the last pound, and then determine the cost based on how many days the borrower needs the loan for

Transparent

• Fees, charges, repayment dates and amounts be must be very clear, before starting the application, signing the loan agreement, and once the loan has been paid out
• The lender should ensure that no matter the short term loan product you’re applying for, you can pay back early without penalty

Selective

• When choosing a lender, make sure they use Credit Reference Agencies and appropriate affordability checks. The loan provider must only lend to people who can pay back the money they have borrowed, so you want to ensure they are responsible in their checks
• With some lenders, only 9 in 10 of people applying for a loan get approved – most lenders will use a stringent criteria

Fair

• Lenders should have responsible collections practices, with all repayments consented to in your loan agreement, or verbally should an arrangement be needed
• Ensure you apply with a loan provider who tries to come to a suitable resolution should a customer fall into arrears
• Check that lenders have no penalty for repaying the loan early

Regulated

• The lender you work with should be regulated by the Financial Conduct Authority (FCA)
• Make sure your lender has permissions in relation to Consumer Credit
• Ensure whoever you apply for a loan with is approved by Information Commissioner’s Office (ICO)
• Check whether the lender adheres to relevant Data Protection laws and guidelines

Loan Checks to Look Out For

• CIFAS – fraud checking
• CallValidate – ID check
• CRA – Credit Reference Agencies
• Affordability checks – using your details, as well as national statistics (usually ONS data) to check your affordability for the loan

Overall, it’s a good idea to do a bit of research into the lender you decide to opt for, or the lender you’re put in touch with through our loan matching services. You can often find helpful information by checking out independent review sites such as Feefo and Trustpilot – former and current customers can comment on the service they have received, so you don’t just have to rely on the word of the lender.