The Cash Advance Process: How It Works
Consumers searching for ways to fill a financial gap will often turn to payday loans for relief. These short-term, unsecured loans are usually for an amount ranging from $100 to $500, and the due date for repayment is the borrower's subsequent payday-generally, fourteen days. The cash advance application process is simple, quick, transparent, and convenient. To apply for a cash advance, borrowers have two options: 1) to visit a payday loan institution in person or 2) to request an online cash advance by visiting the creditor's website and completing an online application.
What follows is an outline of the application process:
1. In-Person Application:
To be approved for a payday loan, a borrower generally will have to satisfy the following criteria:
- Be at least 18 years of age
- Have a minimum monthly income of $1,000
- Have an active checking account
Some payday lenders will accept to transfer funds into a savings account in lieu of a checking account. Also, some cash advance creditors list additional requirements, such as a copy of the borrower's most recent 30-day bank statement and/or one or a few current pay stubs as evidence of a regular income. When assessing a borrower's eligibility, cash advance providers will not verify his or her present bank account balance or credit history. For the most part, payday loan institutions conduct minimal diligence, if at all, to determine whether or not customers qualify for payday loans.
In contrast to an online applicant whose payday loan request can be processed 24/7, the in-person applicant will have to take into account that banks are closed on Saturday and Sunday. Therefore, borrowers requesting a cash advance on the weekend from a brick and mortar payday loan store will not have their loan processed until Monday and receive the funds until Tuesday. On weekdays, some lenders will transfer the funds into the client's account the following day. Some cash advance companies allow borrowers who pay an additional fee to obtain the funds in their bank account as soon as their application is approved. However, for a number of brick and mortar businesses, while payday loans are processed the same day, borrowers might have to wait 3-5 business days for funds withdrawal.
2. Online Payday Loan Application:
Online payday loans are among the easiest funding source to obtain through the internet, due to the fact that the credit check requirement is waived and that faxing is obviated. The borrower can sign the documents by submitting an e-signature instead of a fax. There are numerous online cash advance loan variations that enable consumers to acquire funds without being subjected to a credit check; these include no credit check payday loans, no teletrack payday loans, and bad credit payday loans. Providers of no teletrack payday loans issue funds without performing a credit check or any type of authentication of the personal details furnished by the borrower.
An internet borrower completes the online application by supplying personal data such as name, address, phone number, proof of employment, and bank details, as well as some form of I.D. (i.e. Social Security card) and the loan amount sought. Once the application has been submitted, the online payday lender will perform cross-checking to ensure that the borrower's information is accurate. It might also request an online or telephonic confirmation on the part of the borrower that he or she meets the eligibility requirements. The approval status is usually communicated instantly, and the borrower's online cash advance is wired to his or her checking or savings account within 24 hours or overnight.
3. Repayment Options:
Typically, cash advance creditors accommodate customers by offering them a choice from among four different payment options:
- Automatic deduction on the maturity date of the loan amount plus applicable fees from the borrower's account
- Payment of the loan in full on the due date
- Payment of the finance charge and part of the principal
- Payment of fees and interest only