Support that carries on after a loan is agreed can help borrowers make sense of the options open to them, cope when their personal circumstances shift and manage their loan from the first instalment until it is fully repaid.
Borrowing is often seen as finished once an application has been accepted and the funds are in the borrower’s account, and before then applicants may depend on the lender’s support team for guidance on eligibility, the steps involved in applying, what the loan terms are or which documents are needed.
That support, however, does not lose its importance simply because the loan has been approved.
In the regulated lending environment of the UK, acting responsibly means looking beyond the original decision to extend credit, since a borrower’s circumstances may alter mid-term and questions about repayments, clearing the balance early or other elements of the agreement can arise at any time.
Support that is easily reached and sustained over time can therefore prove valuable throughout a lender’s relationship with each borrower.
When Personal Finances Change Partway Through a Loan
Checking affordability is central to working out whether an applicant can manage a loan when they apply, yet passing that assessment does not promise that their finances will stay the same until the last payment is due.
Shifts in employment or health, household bills that keep climbing and pressure from living costs more generally can each squeeze the money a borrower has available.
Someone who met their repayments comfortably at the outset could therefore find their position altered well before the term is over.
Partly because of this, many lenders ask borrowers to come forward as soon as they can if they expect repayments to become difficult.
Asking for help while money is tight, and before any repayment is missed, lets both parties discuss the situation before payment problems grow more serious.
Once told that a borrower’s circumstances have shifted, a lender may be able to go through appropriate options, depending on that individual’s position, the lender’s policies and whichever regulatory requirements are relevant.
Support Has a Role Even Where Money Is Not a Problem
Help after a loan has been approved matters just as much to borrowers who are not in financial hardship.
Partway through the term, a customer may want to know what paying a little extra would mean, whether the loan can be cleared early or how overpaying could alter the total interest charged to them.
Being able to put such questions to an experienced adviser often makes the decisions easier to follow.
Not every customer wants to communicate in the same way, so offering support through phone calls, email, live online chat or protected digital messages gives borrowers a clearer way to ask questions and get information whenever the need arises.
Easy contact can count for a lot when someone is worried about money, since a borrower who knows where to turn and what help exists may hesitate less rather than holding back because they are unsure how their lender will respond.
Helpful Service Can Lead Borrowers to Raise Issues Earlier
Continuing support until the loan is repaid benefits borrowers, while also enabling lenders to build more open relationships with the people who borrow from them.
A borrower who understands where assistance is available may be readier to mention concerns while things are still at an early stage.
Lenders then have the opportunity to learn what lies behind the problem and, where this is suitable and fits their policies, to discuss potential remedies before any arrears build up.
How well those conversations are handled is important too.
Frequently asked questions pages and automated account tools can answer simple enquiries in moments, although some situations need a more personal approach.
Advisers trained to handle conversations about sensitive financial and personal topics, explain clearly how the loan works and listen properly to a customer’s concerns can provide a level of help that automated systems cannot necessarily reproduce.
When Outside Organisations Are Better Placed to Help
There are also cases where a lender’s in-house team might not be ideally placed to give a borrower the help they need.
A high-quality support service may include putting borrowers in contact with charities and independent organisations offering debt advice at no cost, together with guidance on managing money.
This kind of signposting may matter most of all for borrowers in vulnerable situations and for anyone dealing with more acute financial distress.
It acknowledges that some money difficulties need expert assistance that no lender can supply on its own, while making it easier for consumers to find organisations more capable of meeting their specific needs.
The Duty to Lend Responsibly Outlasts the Release of Funds
Regulation has also brought sharper focus onto how customers are treated throughout the lifetime of any financial product, and for lenders in the consumer credit sector in the UK, authorisation from the Financial Conduct Authority is one component of the wider rules governing regulated lending.
Under the Consumer Duty, FCA-authorised lenders face a firmer expectation that they will work towards good customer outcomes for the full duration of the relationship, rather than focusing chiefly on the sale itself or the opening of a credit agreement.
In practical terms, responsible lending means more than completing an affordability assessment before approving an application, or telling borrowers what interest and charges apply and how comparable products stack up.
That principle holds for consumer credit products generally, and short-term loans are no exception.
Communicating clearly, making customer service easy to access and responding promptly to questions can all help borrowers keep track of what their agreement involves, above all at times when their circumstances change.
Digital Tools and Human Advisers Working Side by Side
Technology means borrowers can now look up information about their loans with much less effort.
Through an online account, customers can check upcoming payments and the balance still owed, while comparison services and eligibility tools let consumers research their options before submitting a credit application.
That does not mean, however, that digital services must take the place of personal customer support, or the other way round.
Some lenders regulated in the UK continue to invest in customer care alongside their digital systems, on the principle that convenient digital tools and the option of speaking with skilled advisers work well in tandem, and Cashfloat, a direct lender based in the UK, combines online access for borrowers with customer support that continues throughout.
Automated services deliver basic information faster and make routine account admin simpler, but when a borrower’s query is harder to answer, or they need to discuss personal matters in private, a knowledgeable member of staff can still be a real help.
Lasting Support Is Woven Into How Lenders and Borrowers Work Together
Responsible lending goes beyond the simple question of whether or not an application ought to be approved.
It also calls for suitable communication standards from the day a loan begins until it ends, and for borrowers to understand where they can go for information or support.
Customers who know the best way to contact their lender, understand what their repayments require and have the confidence to seek assistance when circumstances change are better able to stay involved with their borrowing.
For lenders, keeping support within easy reach from the moment someone applies until the final repayment is made is therefore essential to a lending service that is both responsible and centred on its customers.
