Responsible Lending In This Day And Age

July 24, 2012 · Posted in Investments 

It is not unusual in these hard economic times of recession for even the average person to find him or herself in need of a few extra dollars to get through until the next paycheck comes in. We all over extend from time to time and that is why a payday loan is becoming increasingly an option for having what we need.

Payday loans are very commonly taken for filling out this gap at the month-end. In the past there were so many cases where the lenders gave credit easily to the people who could not repay the loans on time and thus, they ended up in debts. Such lenders who lend a lot of money to those people, who can never repay the loans, must be taught to lend responsibly.

So, now the lenders are facilitated by lending responsibly by using the banking codes. This is a self-governed set of regulations that allow lending only to the suitable candidates who have the ability to repay the loans. This also concerns the treatment given to the customers and making sure that they do not get into any kind of financial trouble by further lending.

Credit checks are there to act as barriers of entry. Lenders must scrutinize the applicant’s credit history and financial practices. It is the responsible thing to do. Payday loan credit checks are not as detailed as those of other loans, but there is still a checklist of qualifications that an applicant must have.

Otherwise, you are going to have to lay your financial life out for the lender you are hoping to borrow from. That means they look at all of your debts as well as the job or jobs that you have so they can decide if you will be able to pay them back in a timely manner. They also need to find out if there is any bankruptcy in your past.

Any time of loan should have some financial checking that goes along with it because it protects the lender but also the borrower. The lender sees that it is going to be possible to get repaid promptly. But the borrower also knows that if the qualification comes through that it is possible to pay it back without getting into financial trouble.

And when there is a need for money for a longer period of time, you should check out other loans available; because the pay day loans are given out only for a small duration. The interest rates and repayment schemes differ to other lending facilities like credit cards or fixed term bank loans. Depending on your credit rating, you will be accepted or rejected for a loan. Also, if a creditor doesn’t trust you, he might simply give a loan for a very short period and check if you can refund it on time.

Checking out the T&C section mentioned by the creditor is to be read out properly before applying for a loan. A creditor must mention the APR and surplus charges boldly so as to avoid any confusion later at the customer’s end. This avails a customer with the facility of comparing various loans and to choose the right option for them.

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