Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk. We are a broker not a lender.
Oct 3, 2019
People borrow money when they are in a financial crisis. If a person is already dealing with a financial problem, it is irrational for a lender to levy any kind of charge or fee. Yet, there are lenders that have processing fees for short term loans. The practice of charging a fee, whatever it may be justified and explained as, is not as widespread as some people may imagine. There are many lenders that do not charge anything for the application, approval process of subsequent disbursal of the loan amount. As a borrower, you should look for such lenders and avoid those that ask for an upfront fee.
There are two ways a lender can charge you a fee for short term loans. Some lenders ask for an upfront payment. Others tend to deduct a fee from the approved loan amount. Both these practices are questionable. First, you should not pay anything upfront. There is no guarantee that a lender will approve your loan. Paying any amount of money upfront is basically unwise, especially if there is no certainty of approval. Second, having a fee deducted from the loan amount defeats the whole purpose of borrowing. If a person requires five hundred pounds and applies for the same amount, then the entire sum is necessary to address the financial problem. Deducting a fee from that amount effectively makes the borrower incapable of resolving the crisis.
There are aggregators or brokers that charge commissions. Just as you should avoid lenders that ask for upfront fees, you must also steer clear of brokers and facilitators who charge a commission. Whether it is upfront or the commission is deducted from the loan amount, you should try to deal with aggregators and lenders that do not charge you anything for the application, approval and disbursal of short term loans.