There’s an old joke that says the only way to get a loan is to prove you don’t need one. It isn’t quite that bad, but the world-wide economic crisis that tightened lending over the past few years served to wake up not only borrowers and lenders, but also regulators, to the fact that everyone must work together to ensure responsible lending.
Responsible lending means that lenders must do everything they can to avoid lending more money than a borrower can reasonably repay, or avoid lending at all to a borrower who has shown a repeated tendency to borrow in excess of ability to repay. That being the case, a borrower might find that increased documentation or lower credit limits have been imposed, even in the previously easy payday or fast cash lending world.
If you are a borrower who has experienced a loan rejection or can’t get the amount you applied for, rather than taking it personally, understand that it’s a measure to protect you as well as the lender. If you find yourself in the position of having to use payday loans on a consistent basis, it’s a sure sign that you are living above your means and need to cut back. Understand also, that fast cash loans are not suitable for a long-term loan needs.
Responsible lending requires the fast cash (or any) lender to do a minimum of a credit and income check. Even though it is typically faster, gone are the days of walking into the payday loan center and getting a signature loan with no documentation other than your last pay stub. If you cannot demonstrate ability to repay, you won’t get the loan at all. But, this is in your favour. People who can’t borrow don’t end up defaulting on their loans, it’s as simple as that.
If you do use fast cash lenders make sure you have a firm plan to repay on time, and use the experience as a warning to determine whether this will be a habit or an infrequent emergency measure. It should never be a habit if it is for personal reasons. If your business requires a line of credit to meet the gap between earning revenue and collecting revenue, there are appropriate business loans to seek for that purpose.
For sound advice on responsible personal lending and responsible business lending, contact the team of professional loan consultants at Speedy Finance.