Cashfloat highlights that fixed, pre-agreed repayments give UK borrowers greater certainty and control over their budgets
-- Household budgets across the UK are under continued pressure, making the ability to plan for loan repayments a key requirement for applicants. Cashfloat, a direct lender, has offered insight into why pre-agreed repayment structures and the certainty of static repayment values are supporting more sustainable borrowing.
The cost of living crisis isn’t new but has prompted greater need for short-term borrowing during cash flow gaps, and more applicants are looking for the assurance of a fixed loan, rather than other forms of temporary credit where minimum repayments are subject to constant change.
Reasons UK Borrowers Are Prioritising Consistent Loan Repayment Structures
Budgeting has become more complex for millions of households, particularly those with fluctuating incomes and expenses, for whom unexpectedly high costs or unaccounted-for outgoings can make an already difficult financial situation even harder to manage.
Short-term loans with agreed, fixed repayments over a selected duration remove elements of stress, where borrowers may be unsure of what they will need to pay, when their next repayment will fall due, or how long they will need to sustain repayments.
Chief Operating Officer Peter Kimpton from Cashfloat says, ‘Over the years, we’ve always offered the clarity and confidence that comes with a stable repayment system, but we’ve heard from increasing proportions of new borrowers that this is essential, especially those who have been stung with higher-than-anticipated minimum credit card repayments or demands for lump-sum repayments against conventional payday loans.’
The company offers short-term loans with values from £300 to £1,500, repayable over a three- to nine-month period, with repayments split equally over that time and collected on a pre-agreed date.
Customers can repay their loan at any stage, without any early settlement or exit charges, thereby reducing the total interest payable, or continue with the agreed repayment schedule until the loan term ends.
Fixed-Repayment Loans and Combating High-Risk Debt Cycles
Many forms of credit, including credit cards, are subject to variable interest rates, and while changes in totals repayable, the interest rate charged, or the repayment demanded are often linked to announcements about the Bank of England’s base rate, some lenders also adjust charges due to:
- Changes to a borrower’s credit score
- Higher costs of lending
- Other economic metrics like inflation
Credit costs can also be based on usage, such as higher charges for cash advances, late payment penalties and foreign currency fees when used abroad. The issue for consumers is that they often have no way to predict when and by how much interest rates will change, and whether they will be able to afford the higher repayments.
This situation can also apply to short-term loans where interest is variable, which poses a risk that borrowers could be unable to cover higher repayments and, in some cases, might turn to alternative credit to cover borrowing costs.
Peter explains that ‘Cycles of debt can become very serious, very fast, and although a responsible lender shouldn’t consider a loan to cover the repayments of other borrowing or credit, aside from affordable debt consolidation agreements, this is unfortunately common.
Fixed repayments where there is no ambiguity or potential for repayments to change remove reliance on further credit, and ensure borrowers know from the outset what they’re paying, and when.’
Direct Lenders Promote Informed Borrowing Decisions
Clarity and transparency are key to ensuring consumers make sensible judgements about their finances, and financial literacy and education are at the heart of this. In addition to providing clear repayment terms, Cashfloat has developed free resources on the firm’s website.
Prospective borrowers can use repayment calculators to see how much different loan amounts would cost or how extending or shortening the term would affect the monthly payment, and affordability assessments to verify whether their finances can accommodate the relevant repayments.
The firm’s publications, articles, and guides covering topics such as debt management, budgeting, and claiming benefits are available through the Cashfloat Blogs page.
About the company: Cashfloat is one of the UK’s leading direct lenders. We provide online loans for people with all credit scores. Cashfloat is fully authorised and regulated by The Financial Conduct Authority.
Contact Info:
Name: Ofer Valencio Akerman
Email: Send Email
Organization: Cashfloat
Website: https://www.cashfloat.co.uk/
Release ID: 89192979
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