A loan is a practical means towards covering for sudden financial expenditures whose scope reach far beyond your monthly budget. And with loan firms taking to the web for lending services, it’s so much more convenient to avail of one now more than ever. Still, many do not know about the types of loans that allow ease in approval and access. One such type is payday loans. What are they? How can you apply, and eventually, pre-qualify for them? Below is a brief summary for you to understand payday loans.
Payday Loans Defined
The phrase “payday loan” is rooted in what you and I understand about “paydays”. You, as the lender, will sign a contract with a borrower stating that the amount you want to borrow will be paid by your next and/or upcoming payday”.
However, its definition isn’t limited to this. The repayment period and terms vary per lender. Some set a fixed number of weekly, bi-weekly, or monthly repayment timeframes. Others, longer. All in all, a payday loan is typically characterized by being short-term, whether in its application, loan granting, or recompense scheme.
Payday Loan Application Process
1. Steady Source Of Income And Identification Validation
Just like any other type of loan, or any endeavour that has to do with financial implications for that matter, identification is the first step to applying for a payday loan. You need not worry about this part of the process because it’s simple and straightforward. You will be asked to provide valid documents and/or I.D.s (i.e. driver’s license, passport copy, voter’s I.D., etc.).
Besides this, you will also be asked to submit “proof of income”. Your latest payslips (preferably from the last 2 to 3 months), certificate of employment, and similar records shall be of great help to this step.
2. An Active Checking Account
Why do payday loan agencies require that borrowers have checking accounts? A payday loan will be mandatorily paid for by borrowers via a post-dated check or through direct debit (from the owner’s account).
Maintaining such an account serves as among the guarantees which the lender can hang on to, in order to obtain the amount due to them in a timely manner.
Supplementarily, a post-dated check is your indirect means of observing your repayment plan without delays. Note that a day past due will instantly add to your loan’s interest percentage. Thus, a checking account is a safeguard for you to be able to avoid said occurrence.
Most lenders, like netpayadvance.com, complete borrower qualifications within 24 to 48 hours. Others, up to a week or two. But by and large, a payday loan procedure will take less time than conventional loans under the control of traditional financial institutions.
4. Age Minimum
This goes for all lenders across the board— here is a loan type that will only conduct transactions with borrowers who are 18 years of age and above. Having guardians and/or financial sponsors do not change this rule of thumb.
5. Cash Out In An Instant
Once you’ve been approved (there usually is no requirement for credit inspection), you will be notified of when you will be seeing your loan amount in your account.