Why would a cash advance lender care about how many other short-term loans an applicant was currently paying for? They don’t care about credit card debt, car payments or a house mortgage and if they did, there would be a credit check. There isn’t one. It is a saving grace to credit challenged customers. Do payday lenders even care if a customer uses other direct lenders? Some do.
There was a study done in England to find out whether or not payday companies would approve a loan with several others out at one time. The applicant presented herself as a credit challenged person with 5 current cash advances. She didn’t volunteer the information, but did answer any question the lender representative asked.
While there were many online lenders concerned about income and expenses, many never even asked about other outstanding cash advances. When a lender did ask, the lady let them know she had 5 other loans out and still was approved by several larger companies. What does this say about the size of direct lender’s business? It is easy to read between the lines. It may not be factual for all, but it makes perfect sense with this study’s results to back it up.
* Large companies can afford to take more risks. With millions of dollars out in loans, there is less worry about default. They have so much revenue coming in that a few hundred dollars in default is no trouble.
*Smaller companies denied the application or approved only the minimum loan amount. Five other short-term loans were too risky for most.
Fast money is easy to get in England no matter your finances look like. Here in the United States, you may have a bit more trouble finding a lender that would work with an applicant with so many loans. If an applicant is approved, it says a lot right there about the lender. They do not run their business in the best interest of the customer. How could anyone afford to pay off thousands of dollars in loans with such high interest in such a short period of time? A reputable cash advance lender would not approve a loan that puts a customer way over their head. This is why the perfect lenders will only approve a loan for a small fraction of income brought home each month.
If you are one of those customers with multiple payday loans out at once, it is time to make a change. It’s not that these direct lenders think that customers are credit worthy. They know that people come for their fast cash because there are money troubles. It takes a responsible lender to value a customer’s finances so they don’t set them up for another automatic failure. It isn’t surprising that the stories out of England are so bad when it comes to payday lender practices. This study is a great example of how bad some lenders can be.
Customers need to do their homework when finding a lender. They also have to be realistic about their financial situation. Multiple loans throughout the year puts a strain on the budget, simultaneous ones are deadly. Make smart choices about your money and what company you work with. It will save you money and headaches in the end.