The Different Types of Payday Loan Lenders
Financial emergencies occur every day from car repairs to past due bills that cannot wait until your next paycheck. In these situations, a local payday lender is an asset worth considering because of the quick processing times. Short-term lending companies base their approval or denials on current ability to repay rather than past financial histories, which qualifies more people than banking systems. Which payday lender is best for consumers? It depends on the availability of the lenders in an area and which type of payday loan works best for each consumer.
B2C Direct Lending Agencies:
Many direct payday lenders directly process applications and provide immediate access to funds. These agencies are business-to-consumer (B2C) lenders that privately negotiate loan terms with borrowers.
Storefront Companies for Emergency Money:
Unrestricted payday lending is legal in 27 states in the United States. Another nine states allow lenders to operate storefronts with some government oversight of lending terms. Short-term lending is banned in the remaining states and territories. Consumers who visit a store fill out an application and provide proof of financial documents including income banking statements. It is a quick process that allows a borrower to pay the amount due plus accrued annual percentage rate (APR) fee, which ends the short-term loan contract. The borrower often then takes out another loan when emergency money is needed.
Online lenders have become very popular during the last few years as an option to local storefront payday lenders. There are also more prominent lenders online than often available locally which gives you more options to choose from. Like local storefronts, online lenders fast-track your application to get a quick response as the online industry has a streamlined approach to processing times. You also will get better rates since online lenders are more concentrated than local stores. Online lenders also approve borrowers who have a lower credit score which often creates barriers when applying to financial institutions like banks or credit card companies. Online payday loans in Hawaii also offer unsecured cash advances to applicants, so you will not need any collateral.
Some consumers opt for offshore lenders whose business is based outside of the U.S. You are more likely to come across shady offshore companies as there is no government oversight or consumer protection. You do have access to larger loan amounts but will pay more in APR and fee schedules, which is a benefit when needing more money.
Third-party Loan Vendors:
Third-party vendors advertise the availability of payday loans to generate sales leads. These affiliates will accept applications and shop around to different lenders. They sell your information to a direct lender, who will process the application and fund the loan. If you are unsure of the company you want to apply, read the small print for an announcement of either not being a lender or being an agency that generates leads by matching you with the best payday lender.
You must research a company before supplying financial information even when in dire financial straits. It is also vital to understand the types of loans available to you to get the best rate.
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