Compared to the rest of the financial institutions out there, payday loan lenders operate with different lending criteria.
As a result, they are able to offer loans to people who have a bad credit rating and would, therefore, be instantly refused by other institutions such as major banks.
In general, before approving someone’s loan request, payday loan lenders will need to analyze their last ninety days of bank statements and then make use of a variety of factors in order to determine if that specific borrower can afford the repayments.
There are a lot of reasons why people apply for payday loans.
Let’s take a closer look at some of the things they need to keep in mind prior to doing so.
1) Online applications
One of the best things about payday loans is that people can apply for one over the internet without having to worry about filing any physical paperwork.
However, they may be required to fax their address, a copy of their employment info and their bank statements which have to be carefully verified by the lending institution.
Since the lender will only look at the applicant’s financial situation over the last ninety days, credit rating is sometimes not a main determining factor when it comes to payday loans.
2) Will your application be instantly approved?
In general, after submitting an online application, the majority of lenders will get back to the applicant in a matter of minutes.
Since the applicant can easily sign the loan on the internet, they don’t need to file or fax back documents nor go to the bank.
Overall, this is a very fast and convenient process that many people consider in order to get the money they need to deal with their financial emergencies.
3) How fast is the payment sent?
The short turnaround time of payday loans is one of the most important reasons why people consider them. In general, the funds will be wired to the applicant’s bank account as soon as on the next business day, which is indeed very fast.
4) Are there any easy and flexible repayment options?
In order to schedule your repayments accordingly, lenders will analyze your frequency of pay and income. The payment will then be automatically debited out of your account on certain day until the loan has been paid off in full.
To prevent any later payment penalties, make sure you always have sufficient funds in your bank account.
5) Thoroughly research the lender
Given the fact that payday loan lenders are going to access your bank account, it’s very important that you consider using one that has a great reputation and is also trustworthy. To do that, you’ll need to go on their website and read their loan terms and policies. If there’s a live chat tool available, make sure you use it in order to learn more about them and don’t hesitate to ask the lender questions regarding the entire loan application process.
6) Learn more about the fees and interest rates
Just like any other loan out there, you’ll need to learn more about the fees and interest rates charged by the online loan lender before you take out a loan. Keep in mind that the interest rates for payday loans can be as high as 24 percent of the principal loan amount per month. However, if you fail to make a payment, additional fees will apply.
7) Can you get redraws or loan extensions?
The good news for those who were unable to pay off their loan on time is that most payday loan lenders will be able to extend their loan term up to ninety days or 3 months.
However, while this is indeed possible, there are extra fees the borrower needs to pay and these shall be discussed with the lender.
Also, before signing anything, people should ask the lender about extreme situations, such as what would happen if they are unable to pay back the loan on time.
They should also inquire about extra or hidden fees they may incur within the time they are required to pay off the loan.
In general, it’s recommended that people remember so-called “golden rules” and avoid loan extensions since they can become pretty costly in the long run. By being totally informed about the process of taking out a payday loan and being financially disciplined, anyone considering one will be able to pay it back on time.