This might probably be the most interesting question that needs to be answered. Why do people take instant payday loans when banks are available to lend money? After all, you might be having a steady job for the last six years, the bank staff knows you well as you’ve never had any overdraft and lending problems and you are a steady good customer. In fact, you feel that if you apply for a bank loan, you should be able to get it.
Wrong! Most people assume the same thing but banks are fickle creatures of finance. They do not sanction loans just because you are a good customer or you have been loyal to them for a long period of time. They follow financial rules, lending rules and then their own in-house rules before sanctioning any type of payment to the customer. Payday loans, on the other hand, just need to verify your salary slip before proceeding. If you still aren’t sure about which lender to choose, let us compare the lending process of a bank vs. a payday loan website
Banks are creatures of paper and they love their paperwork. As soon as you ask for a loan from the loan officer, he will ask for a range of paperwork which includes a formal letter applying for a loan with the reason for the loan listed in it. They will then ask for employment slips, employment contracts, credit score, birth certificates, bank statements, income tax papers, residential proof, and a range of paperwork. This will be assessed as per the bank lending regulations and financial lending regulations. You may be asked to fill in a formal loan application form and you may also be asked to submit more paperwork in the form of asset forms, guarantors if required, cash deposits and etc. The bank continues the verification and assessment process and this usually takes anywhere from one week to a month. If you are approved or denied the loan, the loan officer will call you up and inform you about it. Usually, the loan officer will also inform you about the reason for a denial. The most common causes for denial of a bank loan are short term small amount loans and bad credit histories.
Short term loans are well known for the quick application process and equally quick approval process. The vendors have a very simple application process by which borrowers can put in their name, age, address and work history. These details are verified and banking details and pay slips are requested. Based on the pay slips, the borrower is sanctioned a set amount of money based on his pay slip but they can also ask for a higher amount. The loan is approved in 2 hours and the cash is debited into the account. Borrowers can use the money as they want.
As a result, instant short term loans are usually more attractive to borrowers. They are approved instantly, they are easy to apply for and they can be paid back quickly. The interest rate may be higher but the borrower knows that they can pay back the amount quickly with fewer headaches. As a result, payday loans are going to the go-to option for consumers in the next decade.