Payday loans are one of the most common ways that people get fast cash, but most don’t stop and think about how in the world they can get money for you in less than an hour. The reasons may surprise you, especially when it comes to online loans. In this post I want to explain all of this to you so that you can understand the payday loan process better. Knowing what you’re getting in to will help you stay safe throughout the process. It’s pretty easy to have big problems with these loans, so it’s important that you have every advantage on your side!
The biggest thing that makes these so fast is that payday loan lenders don’t check your credit score. They may take a quick look at your report, but that has little bearing on whether or not you’re going to get approved for your loan. Traditional banks pour over that report and your score, which is why loan application there take so long to get approved. The lack of a credit check has a downside though, it drives the price of the loan up. When a lender has no clue whether or not you’re going to pay the loan back, the risk is high for them, and many people default on these. You’re paying extra to cover the cost they incur when they have to track down the people that don’t pay them back.
Online loans have increased in speed at an incredible amount recently. A few years ago you would have had to fax all of your paperwork to them, but now it’s all processed online. There is a company called Teletrack that does this for the loan lenders. They run a mini-background check on you to make sure that everything that you had put on your application was true. This happens in a split second, and from there the lender determines how much money they can take a chance on lending you.
A problem with this speed is that your bank probably won’t work that fast. Your loan will probably be approved or denied in less than an hour, but your bank will take their sweet time posting the funds transfer from the lender to you. This is why most lenders will guarantee that you get your money by the next business day.
Now that you know the inside on how these loans work you can approach them with more confidence since you aren’t wondering what actually happens to your application once it’s submitted!
