Making Sense of Payday Loan Options at CashNetUSA
According to a scientific poll conducted by Credit Cards.com in February 2010, 29 percent of respondents said they do not have a credit card. This number reflects a ten percent increase in those claiming no credit card in a similar poll just nine months prior, in June 2009.
As more consumers do without credit cards, there naturally arises a growing demand for other types of short-term borrowing. This explains in part the rise in demand for payday loans. Because the lack of a credit card creates many inconveniences and removes a financial cushion for consumers, it can be assumed that almost all persons lacking credit cards do so under duress. In most cases, their credit rating is below the threshold required by all types of lenders, particularly credit card issuers.
Payday loans are made on the basis of anticipated, near-future income, regardless of credit history or an ability to collateralize a loan. But being the lender of last resort is not the only reason why payday loans have increased in popularity in recent years.
The rise of payday loans is also due to its simplicity in online loan applications. Replacing the bricks-and-mortar retail payday cash advance lenders, online payday loans offer borrowers several conveniences:
Time efficiency: Instead of a two-hour venture to and from a retail store, the online application takes between 15 and 20 minutes for most customers.
Security: Internet-based transactions of money and personal information have largely risen above early worries over hacking and other compromises.
Fast cash: Loans are deposited electronically in customers’ checking accounts overnight, in one business day. The fast cash is available for use in less than 24 hours following submission of the application.
But two challenges face the first-time borrower. One is finding the lender with the best terms, the second is overcoming the the personal financial management risks of payday borrowing.
Shopping for the best lender
Users of payday loans can function like consumers of virtually any other product sold online. They could spend a few hours investigating multiple lenders, comparing all terms of each offering.
But payday loan borrowers are more likely to prefer an aggregator such as CashNetUSA (cashnetusa.com). As with airline reservations and the purchasing of merchandise online, this site reviews all available options relative to the needs of the borrower. For most borrowers, the moment when someone looks for a loan is rushed if not panicked. The need for cash is immediate, often to cover an emergency such as a car repair or a bill that might impact where they live (rent or mortgage) or the services they receive (e.g., telephone or Internet cable connections).
CashNetUSA also acts as a screen: only licensed, regulated lenders are included in the search, protecting the borrower from the likes of offshore lenders that work outside the legitimate lending environment. Higher rates, fees and penalties are more typically found among payday loan firms that lack licensing and which do not adhere to state banking and lending regulations.
Answering detractors
A frequent criticism of the payday loans industry is that it only allows customers to get into further debt as they borrow against their next paycheck. The criticism is not entirely valid given how so many lenders work with so large a group of borrowers. The vast majority use the online loans as they need them, and repay on those loans as contracted. But to foster an educated customer, CashNetUSA offers several tutorials online for borrowers who might have trouble understanding the nature of their loan and personal financial management. The key points made are clear:
A payday loan is a small, short-term cash advance. State regulations necessarily limit their size, and no borrower can take out a second loan with a lender until the first is paid off.
A payday loan should be considered a means to address emergencies. If no other financing is available – through family or friends, credit cards, or collateralized property such as car titles – this is a way to cover a pressing need.
Reach out for advice and credit counseling. Links from CashNetUSA.com to blogs and advice websites help borrowers understand the nature of consumer debt and borrowing.
As the resources provided by CashNetUSA make clear, financial literacy is key to being functional in a modern world. Online Payday loans can help address short-term needs, and when used intelligently they can lead to a better, more stable financial state in the future – perhaps even to where the borrower will qualify for a credit card and other forms of consumer financing.
