The speed with which payday loans applications are processed is one of their unique features. The payday loan industry in the UK has developed systems and products that are specifically designed to ensure that borrowers can access their cash loans as quickly as possible. Payday loan companies have invested heavily in the development of technology which drastically reduces the time it takes to complete each stage of the application process. Although payday loans are available on the high-street, the majority of payday loans are processed via the internet where the entire application can be completed in just a few minutes without having to resort to fax machines or the postal service.
In addition, the criteria against which loan applications are assessed are also very different to those of more traditional forms of credit. The major difference being that payday loan applicants are not subject to a credit check. This not only cuts the time it takes to process each appplication but also has a huge impact on who is eligible to apply for the payday loans in the first instance. People who have a history of bad credit or have a low credit rating due to the fact that they seldom borrow money, often find themselves unable to access credit from credit card companies, traditional loan companies and in-store credit. This is because most forms of credit involve a check of the applicants credit history as part of the credit application. Payday loan companies have been able to eradicate this requirement by focusing on the applicant’s current income rather than their previous credit record. Applicant’s are therefore required to submit copies of their three most recent payslips and the payday loan companies use these to determine both the value of the loan and the date on which it will be due for repayment.
Unlike all other forms of credit, payday loans have to be repaid on the very same day as the borrower’s salary is paid into his or her bank account. This means that the loan period is incredibly short and can be measured in days rather than months or years since employees are paid either weekly, bi-weekly or monthly.
Once applicant’s have completed the application form and submitted copies of their payslips, proof of their identity and provided details of their bank account, the application takes just minutes to be processed. If the application is completed at a high-street lending store, successful applicants will receive the value of their loan in cash there and then. If the application is completed online, applicants will be informed via email that their loan has been approved and the loan amount will be credited directly to their bank account within the specified time which may vary from company to company but many offer a service where the cash will be deposited within an hour of approval. The standard time frame is 24 hours.
The speed at which instant payday loans can be processed and the fact that the cash is then made almost immediately available to the borrower are key factors in the rapid growth of this market. This is because payday loan companies have developed their products and their systems in direct response to the need of their customers and they understand that customers who are looking for a payday loan need the cash urgently and that any delay may result in signficant financial hardship.
Of course payday loan companies are in business to make money and they are often crticised for the rates of interest charged on cash advance loans however, given the short duration of the loans coupled with the fact that they are available to people who are considered to be too high a risk to be given credit elsewhere, the interest rates are not as high as one might expect. In fact, at between 15 and 30%, the service offered by payday loan companies in the uk represents extremely good value for money.
In short, payday loans offer a quick and easy solution to people faced with a short-term cash crisis. They are not designed to resolve long-term financial problems but they can help people avoid getting into long-term debt.
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