Are you looking for a payday UK loan? Or perhaps you have heard of payday loans and are wondering what it’s all about? Let’s take a step-by-step look at payday loans here, and see how Moneyboat can help.
Historical Importance of Lending
For centuries, if not millennia, people have come to lenders for instant cash. You might be surprised just how far back in history lending goes. Payday UK loans are relatively new compared to the methods used back in the day.
Without lending, the expansion of human civilisation would not have been possible. For example, the discovery and exploration of the New World in North America wouldn’t have been possible had Spanish explorers not received funding from aristocrats. Moving forward, we have the Industrial Revolution. This was the period that brought the technology free enterprise to drive innovation and was only possible through bank loans. Lending is essential for businesses and individuals to reach their dreams of becoming productive members of society.
Where Lending All Started
The earliest form of lending happened between friends and family members. Just as you might ask your friend to borrow a few quid, people have been doing the same for thousands and thousands of years. These informal transactions were known as lending circles by many and usually involved either individuals or a group of people.
Each person within the lending group would make a monthly payment, and the loan would circulate to a new member each month. The loan would circle the group until everyone had received it. This loan type helped them pay for goods and other necessities in their daily lives.
Lending in Ancient Rome
The type of formal lending that you think of today, first started back in Ancient Roman times. During these times, pawnbrokers or private individuals carried out lending and banking, not large financial institutions. The loans offered were actually very similar to the payday loans you know today. Typically, farmers would come to lenders for a loan that they could use to plant crops for the seasons.
Once it came time to harvest the crops and sell them, they would then pay back the loan. Because calculating interest rates and term lengths wasn’t common practice, farmers would typically use collateral when receiving a loan. Once their crops grew and they could earn their living selling the crops, they would then pay back the loan in full.
The Middle and Dark Ages
Fast forward a few hundred years, and lending is still a component of “modern” life in the Middle and Dark Ages. Lenders had even started using interest rates when providing loans; however, they were limited. In the year 325 A.D. religious leaders announced that it was illegal to charge more than 1% of interest per month on a loan.
The rules for lending followed religious lines pretty strictly as Christians could not lend money with any interest, and Jewish people could only charge interest to people of other faiths.
Lending for Everyone in the 1800’s
By the 1800s, lending became more equitable and available to even lower income citizens. For quite some time only the wealthy and industry partners had access to loans, but with the inclusion of everyday citizens, now anyone could get one. With this expansion, ordinary people now had more of a chance to reach their financial dreams. Whether they wanted to open a business or pay for necessary items, they could.
Lending Shifts in the 20th Century
By the mid-20th century, lenders needed to find a new way to accurately identify which borrowers were responsible with their finances and which were not. Lending had become a profitable business for many, and finding ways to identify good borrowers quickly was a priority. For years, lenders relied on family ties and physical collateral to keep their risks low. By the mid-20th century, financial data become the new standard.
With the advent of credit cards, consumers could easily access a line of credit for their everyday purchases and then pay back their balance within a certain period of time. When you think about it, credit cards are essentially like short term loans that most anyone has access to. Although they aren’t extremely valuable, depending on the approved credit line.
With credit cards came the credit score. This score is the combination of different factors that show how likely a person is to pay their bills on time and in full. When consumers have fantastic credit scores, finding a loan isn’t too difficult. On the other hand, when people have a bad credit score, it can haunt them for possibly the rest of their life. Finding very bad credit loans was next to impossible for a while until the fast loan hit the market.
Enter Payday UK Loans
Loan providers like Payday UK hit the market. They provide individuals with a fast loan option that they previously couldn’t have access to. Payday loans operate on short periods and provide a quick solution when people need a loan today and can’t afford to wait for the bank to approve them. Additionally, payday loans are often options for people with bad credit scores. To ensure that payday lenders like Payday UK can mitigate their risk, they typically charge high interest rates on their loans to help make their money back from borrowers that don’t pay back their loan amount.
Online Payday UK Loans
As you can probably guess, payday UK loans online haven’t been around for long compared to other loan types. The move towards online banking in the 1990’s helped the industry as a whole. Customers no longer have to leave their home to apply for a loan. They can also receive their money digitally that they can then use the same day in many cases.
In the UK, the industry had a couple of hundred of payday UK lenders, but after the introduction of strict regulations in 2010, the number of lenders decreased to only a few dozen. This is ultimately best for the industry and consumers. By controlling the industry, people are less likely to run into financial trouble from online payday lending in the UK.