Sometimes, even the most frugal people can experience a financial crisis. When a person needs quick cash, there are a few options that you can take. Ideally, you can work extra hours, do some gigs or borrow from your friends or family. But when these options are not possible, the next viable option to get you through the next paycheck is a payday loan. Quick cash loans and payday loan companies are easily accessible online. They offer short-term loan services that can carry you over until the next paycheck comes in. However, it is also crucial for you to choose a service that provides transparent and trustworthy services.
Most borrowers would go directly to lending companies after being denied by traditional financial institutions. Banks, credit card companies, and credit cooperatives have strict policies when it comes to lending. These places will ask for requirements, collaterals, guarantors, and a good credit standing. In short, they want to be secured when they lend you money. These securities will be taken in case you are not able to pay off your loan in due time.
More so, the process of completing the requirements and the verification process can be time-consuming and for those who have no security to provide. Thus, borrowing from a traditional institution is not an ideal move for many. Many lending companies have developed products and services to offer financial relief to various types of borrowers. Whether you are in for a quick payday loan or looking for other unsecured loan options, these companies are willing to accept your application.
Verification Process of Most UK based Payday Loans Companies
Typically, a payday loan is a small loan with a two-week term and is due for a lump payment on the next payday. There are many names for it. Some refer to it as a short-term loan, cash advance, fast cash loan, bad credit loan, and unsecured loans. These loans are made available for people with poor or no credit but need to borrow cash immediately. Over time, payday loans have evolved, and new loan services under it are offered for a staggered repayment system.
Payday loans are your best option if you have bad credit because it does not rely on your credit record to assess your capacity for repayment. Some people believe that payday loan companies do not conduct credit verification. However, these companies do some checks before they approve of your application. What they do for people with bad credit are just soft checks instead of “hard checks” that leave marks on your records. More so, here are some verification processes that they do before approving your loan.
1. Photo Identification
One factor that makes payday loans very attractive is the convenience it offers to the borrowers. Presently, you can apply and complete the process without leaving your home. All you have to do is to fill out an application form online and provide copies of your identification as requirements. The lending company will verify your Photo ID and may ask for a government-issued ID card. You can submit your social security or your driver’s license for this purpose.
2. Paycheck Slip
A stub or slip of your paycheck is an essential requirement for verification if you apply for a loan from payday companies. If you are a new lender, you have to produce copies of your paycheck or stubs to present as a requirement. Some lenders need the last two month’s payslip to process your loan. They require this to confirm and verify the details in your ID card and as proof of your capacity for repayment. The loan amount that will be approved is generally based on your income.
3. Employment Verification
You will be asked to fill out an application form if you apply for a loan online or at a physical lending office. You have to indicate your current employment, your office address, and the contact numbers. Lenders will conduct quick verification to check the authenticity of the information you provided. They may call your employer to verify your employment and if you are active on the payroll.
4. Bank Account
Lenders will also need an active bank account of the borrower. Once you are approved for your loan, the amount will be deposited into the account number you provided. In some cases, borrowers also make arrangements with the lender to automatically deduct the payments from this account. It is a convenient arrangement, and it reduces the risk of the borrower defaulting on this payment schedule.
Why Are Payday Loans Companies Very Popular?
One of the best things about payday loans that attract people is the quick processing scheme they offer. If you compare it with traditional loan applications, it may take days to get approved and several more before you get the funds. Aside from the quick process, here are some more reasons why people turn to cash advance loan companies.
1. Easy Access
This is probably one of the best features that payday loan companies guarantee for borrowers. They provide straightforward steps and immediate lending decisions. You can access and apply for a payday loan online and complete the process in a few minutes. After submitting your application, the verification will start and you’ll receive a notification on the approval or denial of your loan. You may receive the amount of your loan ready in your bank account within 24 hours. You can apply anytime, as they are available 24 hours a day and seven days a week. All you need is a computer or a mobile phone connected to the internet, and you can already start your application.
2. Fewer Requirements
Payday loan companies also ask for fewer requirements compared with traditional lenders. If you approach a bank or a physical lending institution, you may be asked for a Proof of income, or employment, social security number, photo ID, and credit check. When it comes to “fast-cash” companies, the general requirements are government-issued ID, proof of income or employment, and an active bank account.
Fewer requirements make the process of loaning more convenient. However, some lenders will ask for the additional requirement as a layer of protection for you and them as lenders.
3. They Don’t Do Hard Checks on Your Credit.
Contrary to what most people believe, even payday loan companies offering bad credit loans do check your credit history. All lending institutions are required by the FCA to check credit records before approving any loan application. But unlike traditional loans where you need good credit records, payday loans are granted even with no or bad credit.
Payday loan companies will not pull out your records for a hard credit inquiry. This may also help keep your credit score stable as hard inquiries can lower your score by some points.
4. Payday Loans are Unsecured Loans
Payday loan companies do not ask for security on your loans. Unlike traditional title loans and car loans, payday loans are not secured by personal property. This means that the company cannot seize your car or your property in case you default on your payments.
On the other hand, lenders are often granted access to your bank account, which is conditional to loan. This is a different kind of security. They may also enforce other measures such as hiring collections agents or send you to court for outstanding balances.
Payday Loan Companies Will Help You on Your Emergencies
Payday loans are popular alternatives for quick cash needs. These types of loans are designed to help people during emergencies; thus, you should not expect it to solve long-term financial problems.
In most cases, lending companies have dedicated services for expedited loans in emergencies. If you are in urgent need of cash, you can call your lending company at their help desk to fast track your application. Fortunately, you don’t need to have a good credit history for accelerated processing of loans. You can cash between £500 to £1000.
Lending companies offering payday loans understand that when borrowers need a quick response for their applications. This is why payday loans are convenient, and it is one of the best fastest ways to source out funds during an emergency.
While most people believe that payday loan companies have very high-interest rates, most people fail to see that these loans are not secured. Borrowers can default on repayments anytime, and there is no security to cover the lenders. There is no property to confiscate or a guarantor to pay off unpaid loan amounts in case of quick cash loans. This is one of the reasons why lenders need to conduct verification checks. Payday loan companies need to verify the borrowers’ employment and salary before approving the loan.
You have the option to borrow from a reputable bank when you experience a financial crisis. But for urgent cash needs, you might want to check out the offers of payday lenders. They may have higher than average interest rates, but they are speedy in providing loan decisions and in releasing the money that you borrow.