As the term implies, payday loans are small loans granted by banks and other financial houses to answer for a person's immediate and temporary cash shortage. The cash shortage is usually for a short period only, from one payday to the next. This happens in cases of emergencies or when there are unforeseen expenses that cannot wait or cannot be deferred until the next payday. The need might arise from unanticipated household supplies shortages, car or appliance breakdowns, urgent house maintenance, children's school requirement, accidents, and the like.
Because the borrower's need is immediate, temporary and short term, it is necessary that the borrower must be able to get the cash loan within a day or two. Any longer and the borrower's need would have passed and the loan would not serve its intended purpose. Recognising this, lending companies and merchants usually dispense with the usual voluminous paperwork and lengthy investigations on a borrower's credit worthiness associated with normal credit and loan procedure.
A payday loan application duly filled up and a verification that the borrower is actually employed and therefore an income-earner, or receives regular cash benefits, and is legally capable of entering into contracts, are usually enough to satisfy the bank's requirement. Also, the amount being small, the bank will not require mortgages or securities from the borrower. Still, although the amount is small, it is still a financial obligation and the borrower is well advised to fully understand the transaction before entering into it.
The traditional way of asking for a cash loan would be to go to the bank, go over the terms and conditions, and if agreeable, apply for and comply with the lender's requirements. To skip the tedious process, most lending companies today allow loans to be submitted online, which is convenient, especially for people who have very little time to spare travelling to and waiting in the bank for at least a couple of hours or most of a day.
Once the application is received, processed, and approved, the borrower is notified. If prior arrangement is made between the lender and the borrower, the proceeds of the approved loan will be deposited by the lender to the borrower's bank account, and the borrower can immediately access and use it for its intended purpose. When it comes to payment, the lending company will require a post dated check, usually due on the borrower's next scheduled payday. Unless otherwise agreed upon, the easy payday loan will be paid in whole, together with the interests and such other fees or charges.
While it is basically easy and simple to get payday loans, a borrower must still comply with certain pre-qualification requirements. He must be of legal age, gainfully employed, or at least receives regular income and be deemed to have the capacity to pay, and has an existing bank account. The absence of one or any of these will, in all probability, be a ground for disapproval of the loan application, or at the very least, delay the processing and approval. The borrower should also be ready and willing to make certain financial disclosures when applying for a payday loan.
Sean Teahan co-founder of Cash Doctors, Australia's preferred short term lender, shares his insights on money matters. Founded in 2005 Cash Doctors has helped thousands of Australians with their fast cash loans but that's just the short term solution. Cash Doctors also help people in the long run by providing budgeting tools, e-books and individually researched articles on money matters and financial tips. The aim is to assist people in achieving instant and long term financial freedom.
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