Lending money is a very responsible thing because every time when taking a decision to get money, you risk losing something of value. Even if you have chosen the payday loan online without the collateral, you should treat your choice with the utmost importance due to the reason that the non-repayment of a loan will result in the negative consequences. How to benefit from the financial help provided by lenders and not face unwanted problems? Check the answers to the questions about the most popular types of lending to know what to do next.
Question 1: What is a payday loan or a short-term loan online?
A payday loan definition may sound as “ A financial transaction, during which a creditor issues a loan to a borrower with a money amount at a specified interest rate.” The issuance of the loan takes place in rather small amounts. Many financial institutions are engaged in the provision of loans, the limit of which reaches $1000-$1500. Payday loans are so-called short-term loans. Basically, the time period for using borrowed funds is from one week to one month.
Making these loans is very, very fast. Some financial institutions claim the borrower for just a few minutes, others – for several hours. The submission of an application and the receipt of a sum of money sometimes takes place one day. This is the main advantage of a micro loan – it is an opportunity to receive cash even if you have a bad credit history. If this fact is very often the reason for refusing to issue a bank loan, financial institutions significantly simplify the process of issuing a loan (the borrower’s credit history is simply not taken into account).
Important: Microcredit or a fast loan until the payday is a very convenient and affordable option to solve its short-term financial difficulties. At the same time, when formalizing an agreement with the lender, it is worth to assess your financial opportunities. It is not necessary to take a loan in that situation, if there is no certainty that it will be repaid in the due and allotted time – in this case it is better to look for a more convenient option.
Question 2: Who is a credit broker?
A credit broker is a person or company whose main goal is to help needy clients to find the loan that is optimal for them (money loan).
He is interested in that the client has formalized the loan with the most favorable terms. In addition to assisting in the preparation of a loan, his duties include monitoring of various financial proposals on the credit services market, tracking updates in programs developed by credit institutions for their clients.
This specialist will gladly consult a potential client of the bank, give advice on how to arrange a loan and select the most attractive offer. This person has a wealth of experience in the field of lending and can use his connections in the banking sector, infusing his client with absolute confidence that he will be given a loan for his needs.
Most often, the services of creditor brokers are used by those who for a number of reasons can not afford to conduct a study of bank proposals on their own in an attempt to find the most profitable loan. The most frequent clients of creditor brokers are civil servants, as well as businessmen deprived of free time. Being limited in time, potential clients of banks may not dare to issue a loan.
The average cost for providing services to a credit broker totals about five percent of the total amount of a loan. Helping a client to get a loan, he solves three main tasks: he/she studies the client’s history, learns his solvency and assesses the complexity of the transaction. The broker-specialist and the client have a common goal, therefore their cooperation will necessarily await success. The client provides full financial information about himself and personal preferences regarding the loan, he also analyzes the information received and, based on the social status of the client and the amount of his monetary savings, filters dozens of programs that financial companies offer, selecting the most profitable for him and the client.
This financial specialist, you can call him so, starts his work with the client and brings it to the victorious end. He/she personally checks and, if necessary, draws up documents that bank companies require before granting a loan. He/she will come to the rescue if the borrower has a rather difficult situation on loans. In addition, today it is increasingly possible to meet such professionals who act as intermediaries and draw up all the necessary documents quickly and efficiently.
Important: When seeking help from a credit broker, you can get a lot of useful tips, thanks to which the client will unerringly choose the most profitable loan that will meet all requirements. Such a professional will be able to protect the client from concluding unprofitable agreements.
Question 3: How do banks check the financial status of their borrowers?
Carrying out the provision of funds in debt, the banking organizations are forced to conduct mandatory verification of their clients on the following factors: how responsible, honest, and, of course, are solvent. Even in such situations, when the loan is issued for a relatively short time, credit institutions very carefully and prudently relate to this issue.
Clients who apply for financial resources for the first time are asked by the question: how will the banking institutions verify them and what points should they pay special attention to getting a positive decision of the credit commission. It is worth studying the procedure for checking banking customers more thoroughly.
When making decisions on the application of a borrower, credit organizations carefully consider all the information received from him, including all kinds of documents, questionnaires, data obtained during a personal interview, information stored in the scoring system of a financial institution or the Bureau of Credit Histories.
Obviously, that is why attempts to submit fake documents to the banking commission or to enter incorrect data in the application form lead to the exposure and introduction of the client-loser in the so-called “black list”. The latter usually leads to the fact that the borrower will not receive a loan in other financial institutions.
In general, we can say about two ways of checking borrowers commission of each commercial organization:
- Carrying out of full check with reference to a wide range of customers, who first apply to a banking institution.
- Carrying out a partial check-up for clients already using borrowed bank funds and timely repaying all their obligations. This also applies to persons who receive salaries or pension through this banking organization.
A complete check involves evaluating a whole range of methods that characterize a potential customer, including:
- Evaluation of compliance with the main banking requirements for the following issues: gender, age, income, completeness of the documentary package, as well as the correctness of the application form.
- The client’s credit history and information about it from other banking organizations and tax authorities are checked.
- Documents detailing the work activity of the client and its sources of profit over the past few years are considered in detail.
- The compliance of the claimed data is determined – it is compared with the data of the municipal authorities, tax authorities and so on.
- A telephone verification is carried out, that is, they check the mobile and city telephone numbers presented by the client.
- Check of the degree of client solvency. Verify the solvency of the guarantors and assess the collateral.
Important: Carrying out of the analysis on the above points enables the banking organization to fully assess the extent to which the client is solvent and thus assess its own possible risks. The process, externally costly and time consuming, in fact, is automated to the smallest detail. Due to this, the banking organization can make a decision on issuing a loan in just one day.
Question 4: What is an interest rate and how is it calculated?
The interest is the revenue amount charged for the money loan. Any banking organization when issuing a certain amount of money, will necessarily do so at interest. The issue of credit funds to legal entities and individuals at interest is the main way by which the budget of the banking organization is replenished. Many citizens are aware of the fact that a banking institution gives money in the form of a loan at interest but very few people know what rules are used to calculate them.
Very often, by taking cash in a bank institution or receiving a credit card, an individual is not aware of how much he/she will have to pay, and then there comes a shock state from the sum announced. Therefore, before taking a loan, it is worthwhile to get acquainted with at least general information and learn more about the rule, according to which the interest on the loan is calculated. Further – more about the rules and nuances of accrual of credit interest, which must be carefully studied before taking on credit obligations.
The time period for which cash is accrued for the use of a loan is called the interest accrual period. If it is normal, their accrual begins after the issuance of a certain amount, and the completion is made on the day of full repayment of the loan. This procedure is regulated by virtually all borrowed organizations. The more time to repay the loan debt, the more interest must be paid. Of great importance is the scheme, according to which the payment for the borrowed funds will be made (each scheme has its own nuances).
During this time period, interest on the loan is accrued using one of two working schemes: standard or annuity. There is not much difference with which particular posting the interest payment should be made, since in the first and in the second case the monthly payment will consist of two main parts – parts of the principal amount and interest charged for the use of the loan.
Important: If the charge is made using a standard scheme, then the size of the main debt decreases. Consequently, there is a decrease in interest (that is, the use of such a scheme is more profitable for the client). When using the same annuity scheme, the situation becomes much more complicated.
Question 5: What are the advantages of getting urgent online loans?
The main advantage of online microlending is the factor of its efficiency. Any person can face an emergency, and in such period of time, money is needed urgently – that is, there is simply no time for a person to visit a banking institution. For registration of a microloan online, you will only need to have access to the Internet and a valid bank card.
Your application will be processed as quickly as possible. In fact, all credit institutions that provide such services, for consideration of the appeal of a potential borrower, are given 15-20 minutes. After this, you instantly transfer the amount to the bank card of the borrower.
The difference from a bank loan is that you do not need to collect a whole set of documents to purchase a quick online microloan. The implementation of this operation is possible only if the citizen has a passport. Naturally, you will be given money, even if you do not have a certificate from the workplace, a certificate of income confirmation, or other hard-to-access documents.
When considering the client’s request for a loan, banking institutions pay close attention to the study of his credit history. If a person has previously admitted a delay in loans or he is taking a loan for the first time in his life, he is usually refused. While a microloan can be taken without going through the applicant’s credit history – that is, in this situation, there are substantially fewer failures for such transactions. No banking institution can offer its clients such favorable conditions for obtaining loans. It is for this reason that online microloans have been very popular recently.
Sites of financial organizations that provide this service contain conditions, as well as all the necessary information on the implementation of this operation. To receive a loan, the borrower first completes the application form, indicating in it his name, contact details, series and passport number, as well as other necessary information.
Important: Before taking an instant loan, it is worth paying careful attention to the study of conditions and requirements, as well as the amount of overpayment for a loan. Another advantage of this service is that you can immediately see how many percent will have to be overpaid, and what amount will ultimately have to be paid for using the loan.
Study the answers to loans FAQ above and make the right decision whether to lend money in the current situation and what loan type to give preference to.