Three reasons why payday loans may still appeal to borrowers
August 27, 2010 by admin
Yes it is a fact that Payday Loans have super high interest rates and can be very habit forming. But to some borrowers there may not be any other options that make sense or are available, especially in an emergency. Are you undecided on whether to apply for a short term cash advance or payday loan or not? Here are some bits of information you should be aware of, which will basically explain why payday financing is a may or may not be a good option for you.
Minimal Requirements
Payday financing only requires proof of regular employment, bank account information, and a post-dated check to receive a loan. Banks on the other hand would need all the above mentioned documents plus collateral (for secured loans), certificate of employment, a spot-on credit history, and in addition, you also need to establish a strong capability to pay the loan. If you cannot make the bank believe that you can pay it off, they will not approve your application.
Higher Approval Rate
Apparently, if you have a property that you can use as collateral, you get better chances of getting approved for loans from banks and other lending institutions. But, for those who have no property to put up as security, the likelihood of getting approved may not be as good, especially if they have very low FICO scores. You are better off going to payday lenders if you have not had any luck getting a loan from your bank.
Fast Approval
Because banks and other lending companies have to run a complete credit check on loan applicants, the time it takes to process and approve/disapprove a loan will take a few days and even weeks, particularly if additional documents are required from the applicant. With payday financing options however processing will take 24-hours or less, which makes it the most ideal choice for people who need quick cash.
Convenient and Easy Application
Banks would require you to go to their office to file all the necessary documents, and although others offer online applications, you would still need to fax so many papers to them so that they could properly assess your capability to pay. Credit unions may have lesser requirements and also gives you an option to apply directly from their websites, but just like banks, you will need to go to a local branch to sign some paperwork. Payday lenders, on the other hand, would only require you to fill out their online application form, and a number of them do not even need you to fax any documents to them.
These advantages offered by payday lenders are what made this kind of loan very popular among a large fraction of the employed consumer market today.