We all experience financial shortfalls from time to time and everyone has their own way of covering the difference. Some people may use their arranged overdraft until they get paid again, some may have savings put away specifically for unexpected expenses, and others might be used to taking out a small loan to bridge the gap until payday.
Within the last few decades, borrowing has changed quite a bit along with the digitalisation of the banking sector. One of the biggest changes is payday loans. There used to be payday loan shops on the high street and in the same way you might visit a bank branch, you could visit a payday loan branch to apply for a small sum of cash to help you manage your cashflow until payday. These businesses swiftly moved online and while some payday loan shops still exist, the vast majority of short term lending is conducted online.
This is for various reasons, namely the privacy for the customer and the speed of the application and decision making process. Whereas previously, you might have to fill in a paper form and wait for the application to be reviewed, then for the funds to be manually transferred, it’s now all online. This means the application form is quick and the decision is almost instant. If approved, the funds are transferred to your bank account within seconds (although it can take up to two hours).
When you make an application online with a payday lender, they will conduct a creditworthiness and affordability assessment to make sure you can afford to make the repayments. Usually, this will require a hard search on your credit file as well as income and expenditure checks which may include reviewing your past months’ bank statements. Additionally, most lenders will have anti-fraud measures in place and normally will only be able to transfer a loan to a bank account in the name of the person who applied for the loan.
While lenders have a duty to lend responsibly, as a borrower, you also have a responsibility to ensure you only apply for credit when you really need it, and if you know you can afford to make your repayments. There might be some aspects of your application that creditors can’t verify. For example, if you have just been made redundant, creditors won’t be able to check this (unless they contact your employer directly which is unusual) so you must be honest in your application form. Taking out credit with no means to make the repayments means you might miss your repayments which will make credit harder to obtain in the future.
Of course, most creditors will understand that things can go wrong, even if you have the best intentions when it comes to repayment. Another benefit of using online payday lenders means you can send them an email or give them a call to arrange an alternative plan or amend your repayment dates, instead of trekking down to a branch to sort it out. Most lenders have 24 hour response rates and will want to help you repay your loan in a way you can afford if you are experiencing a spot of temporary financial difficulty, so resolutions are quick and pain-free.
If your financial difficulty looks to be more long term, it may be worth getting in touch with a free debt advice service. Most debt advice charities are online as well so you can arrange an appointment or get in touch online to talk through any difficulties and get advice for how best to manage your money going forwards.
While the digital age is moving quickly and some of us may be struggling to keep up, things moving online is nothing to be scared of. In fact, it will likely save you both time and money when it comes to managing your money from month to month and getting advice when you need it.
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