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Banks vs. Payday Lenders - What Makes the Most Sense Short-Term?

Aug 30, 2008
Payday loans are not like any other loan that you can get from a financial institution. Have you even every applied for a payday loan? Well, today we'll discuss just what getting one means and the process that it entails.

First let's review what it takes to get a loan from a bank or other traditional lender. First you have to inquire if the loan officer is available, and sometimes you have to make an appointment just to see them.

If it is a loan, they want you to have a bank account with them to get a loan through them. Then once that is out of the way, they ask you how much you want, how long you want it and what you need it for. I am not sure about you, but sometimes I haven't wanted to go into detail about what I needed the loan for.

They give you the interest rate, ask you about your work history, income and major creditors. They then tell you that they will pull your credit history and get back to you in a couple of days. You walk out empty handed and have no clue if you'll even get the money.

Two and a half days pass by and the bank calls you back with the decision of your loan approval. Luckily, you are approved but because of your credit score, which happens to not be very high, your interest rate is much higher.

They require you to come into their business and sign the paperwork needed to get you the money. You do that and then have to wait for the check to process or the direct deposit. The direct deposit doesn't usually take too long, but it has now been anywhere from 3-5 days.

Now, the payday fast cash loan is a much nicer a process! You go into a facility, or online which is even faster and easier, you tell them how much you want and the length of the loan.

They tell you their fees. Usually a certain dollar amount for every $100 you borrow. You show proof of income and bank account, sign your name and out you walk with a check or a direct deposit within just a few hours.

They usually won't run your credit and if they do, their approval rate is usually not dictated by your report. In fact, people with very bad credit scores are good candidates for these types of loans.

As mentioned above, the online lenders make it even very easy as some offer a faxless transaction and everything is done electronically.

You should take some precautions with fast cash lenders though. Make sure you are dealing with a company located in the United States. Find out your state laws regarding payday loans so you are prepared with knowledge and will know if you are being taken advantage of.

Be leery of places that don't ask for work or bank history. When very little information is taken at the time of the loan contract, they usually won't take information when people come and cash checks at their place of business. There are people who do shady business and you don't ever want to find yourself in a legal situation.

Other than that, the process is quite simple. The industry realizes the service they are providing is short-term. A good lender will advise you to seek a traditional loan if you need a large amount or if you are unable to pay it back within a month or so.
About the Author
Michael New Jr. is an authority in the financial industry. He has written hundreds of articles relating to consumer services and Payday Loans.

Contact Info:
Michael New Jr.
(866)294-4672
miken@checkcity.com
http://www.checkcity.com
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