Loans are a very significant part of the national economy. Regardless of the mode and amount of the loan, borrowers keep the economy going on with the money they borrow.
To put this into perspective, the borrowers would buy goods, pay bills, and spend money on other items. And whenever a transaction is made, a significant portion of it is paid to the national treasure as taxes.
Noteworthy is the fact that a large population in Alberta has poor credit scores. And to add to the problem, most of the borrowers that seek short-term personal loans, need immediate funds. Many apply for online payday loans in Alberta seeking relief from an urgent cash crunch. And it makes sense.
What is a Payday Loan?
As the name suggests, these loans are usually payable towards the payday. In other words, the borrower has a short tenure to repay the loan, usually about 2-3 weeks.
Payday loans usually range between $100 to $2500, but that solely depends on the applicant’s credibility.
Many payday loan lenders state that they don’t go through the applicant’s credit history or make any checks on their profiles. But, this statement is misleading.
Consider this fact, the lenders would want their money back. After all, their profits depend on it. And if they lend out a loan to everyone without making any checks, they may risk their investment. Nobody wants that.
Who can get a Payday Loan?
Notably, payday loan lenders do offer loans that involve high-risks. But, they do not ignore the credibility of the borrower. Instead of no-credit checks at all, the lenders usually assess the income and monthly expenses of the borrower before they lend any money.
It means, people with bad credit scores or history do stand a chance of getting a payday loan. However, it comes with a high price to pay.
Not only the processing fees but also a high rate of interest.
Usually, the rate of interest levied on payday loans lies somewhere between 15% to 78%, but it can exceed in some cases, as well. It is rather better to have a word with the lender before borrowing.
Where to find Payday Loans?
Conventional banking institutes do not involve high-risk investments. Usually, they would deny any application from a bad credit holder. It means, finding a payday loan at a centralized bank is near to impossible.
Private lenders are usually the ones who work with high-risk lending. Seeking a payday loan from a private lender is by far the most trustworthy option. But, applying with only one lender might be foolhardy, at the same time.
So, instead of looking for private lenders, it is better to access a money lending network that has a catalogue of different lenders offering payday loans.
A money lending network works in a similar way as a private lender in many aspects. Users can fill in their details, make an application, and also connect with support. But, instead of lending the money itself, the network allows the users to connect with private lenders. It is like a supermart of private lenders.
The users can compare plans, terms, fees, and rates of interest that each lender has to offer. Thus, making a more informed borrowing decision.
How Authentic are these Loans?
The stakes are equally high in payday loans, for both- lenders and borrowers. While the lenders risk their money, the borrowers risk sharing their personal details. And to more surprise, these personal details may include bank statements as well.
A rather obvious doubt that every borrower should have is about the authenticity of the lender. While the lenders make their own satisfactory judgements, the borrowers need to make their own assessments too.
To make sure that the borrowers and customers are protected the government agencies have stepped in. There are certain rules and regulations, introduced recently, that intend to cap the high stakes for borrowers.
Most important of all is to regulate the online payday loans industry. While audits to physical stores are easy and, of course, there is a personal touch to them, the online stores have no physical identity. These virtual stores, however, are mostly governed under the Payday Loans Act, 2008 that prohibits lenders from exploiting their customers.
Nevertheless, there are some precautionary measures to ensure that a lender is trustworthy and legit. For starters, a money lending network could be a good resource for finding a private lender. In most cases, the lenders that a network includes in its catalogue would have gone through a customary check for authenticity. Plus, the users can also rate and review the lenders they have worked with.
All in all, these networks are one of the most legit sources to find the right moneylender.
Other sources may include, local directories, financial journals, and monthly reports issued by the national agencies.
Are there any Other Benefits?
The biggest benefit that these payday loans have to offer is convenience. As already mentioned, these loans are quite easy to apply and quick for loan disbursal, the borrowers get access to emergency funds.
Besides, many lenders offer referral programs or points for redemption. As the borrowers use more and more of their credit line, they earn more points, which can later be redeemed for exciting offers.
Another benefit that these online payday loans have to offer is- they can help improve credit score. But, there is a catch to it. The borrowers would need to make timely repayments for their debts. Missing out on repayments schedule can affect the credit score far worse than it can benefit.
The online payday loans market is not new, but rather it is a growing industry. With more and more private lenders stepping into mainstream lending, the competition for both- the borrowers and the lenders, has become tougher.
It is worthwhile to assess personal finances before taking out any loan. After all, a loan is a debt and it needs to be repaid. Failing to which can have drastic consequences.