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The History of Payday Loans

Payday loans have been around for a number of years in one form or another. If you are interested in getting a payday loan, you might want to learn a little bit about these loans and how they got started in the first place.

The first payday loans were given out in the U.S. back in the 80s as a result of interest rates becoming deregulated. Because there weren’t the kinds of rules and regulations on rates back then that there are today, many lenders saw a great opportunity to make a lot of money.

The Lending Revolution

Short-term loans have been around for many years, but payday loans were somewhat of a game changer in that they dispersed funds to qualifying applicants extremely fast. It wasn’t until payday loans became a thing that people could get money for emergency expenses within as little as 24 hours. Over the years payday loans have grown significantly in popularity. It is now a £billion industry because of the sheer umber of people who are getting these loans each year.

Landmark court decision paves way for Payday Loans

It all started back in 1978 when the Supreme Court made a landmark decision that allowed national banks to charge interest rates according to state law rather than any federal regulations. Federal deregulation had a major affect on a wide range of businesses, including banks/lenders. It didn’t take long for lenders to start offering short-term, high-interest loans to people in desperate need of quick cash.

The Internet‘s role

As the internet started becoming increasingly popular in the mid 90s, payday loan lenders found a much easier and more streamlined way to make these loans available to the masses. With so many of these lenders setting up websites to allow people to apply for payday loans online, they became more popular than ever before. It was now no longer necessary for most people to physically go down to a business to get a payday loan, which was a huge deal at the time.

A vast majority of these lenders were eager to jump onto the internet bandwagon because of how much easier it made it for them to get customers. This technological revolution played a huge part in making payday loans the titan of the banking industry they are today. Payday loan lenders started popping up all across the nation and in many other countries all over the world.
It also became common for lenders to operate outside of the U.S., as there were far fewer regulations to hinder their businesses. The U.S. has been known for its strict stance on banking regulations for some time now, so it seemed obvious for many businesses to go this route.

Mainstream Banks and Payday Loans

Believe it or not, traditional banks have actually played a pivotal role in the ubiquity of payday loans. One of the ways in which the banks encouraged the further development of payday loans is by allowing ACH withdrawals without any hindrances. Suddenly bank customers were allowed to halt payment on ACH transactions.

International popularity of Payday Loans

Payday loans have become extremely popular in many places outside of the U.S., including the United Kingdom. In fact, the U.K. was one of the first places in which lenders decided to start offering these loans after it was clear they were quite lucrative in the U.S. There have since been a number of laws and regulations put into place regarding payday loans, but that hasn’t stopped lenders from offering them.

Why payday loans have become so common

There are a number of things that have contributed to the popularity of payday loans, including how quickly people can get the funds they need. Many of the people who apply for these loans need quick cash for some sort of emergency expensive.

Payday loans provide qualifying persons with a way to get the money they need without all of the delay and red tape that is associated with other kinds of loans. Another reason why these loans have enjoyed such great success is because they don’t require you to have great credit to qualify, though the requirements do differ depending on the lender.

Payday Loans and Credit: What you need to know when applying

When it comes to getting a payday loan, you will definitely need to take your credit into consideration. While it’s true that even those with less-than-perfect credit can easily get a payday loan, you will still want to learn all you can about how it could affect your chances of getting approved. These days having good credit is essential for a number of reasons, including with loans like these. By taking the time to get this information, you will make the process of getting a payday loan much easier on yourself.

Check your credit

You can assume that the lender you apply to for a payday loan will run a credit check, but it’s important that you take a close look at your credit report before filling out an application. The main reason that this is such a good idea is because it will allow you to check for any mistakes or errors that could be negatively affecting your credit. It will also give you a good idea as to what your chances of getting approved are like. Everyone should check their credit score once a year for these reasons.

The credit check

While you will most likely have to submit to a credit check when applying for a payday loan, the good news is that the lender may not check with all three of the major bureaus. The fact is that credit checks for payday loans typically aren’t as thorough as with others. This means that there is an increased chance of you getting approved for the loan you need. It can be extremely tough for people with bad credit to get many kinds of loans, but this isn’t the case with payday loans at all.

Speak with each Lender before applying

You might want to think about speaking to some of the different lenders in your area before applying to one of them for a loan. Take the time to ask some of these lenders what their policy on credit checks is like. This could give you a better idea as to which lender is most likely to approve you for the loan you need. Some payday loan lenders are stricter than others when it comes to their applicants’ credit. In general it is pretty easy for most people to get a payday loan though, even with poor credit.

Approval is never guaranteed

It’s important to remember that while it’s typically very easy for most people to get a payday loan regardless of their credit, approval is never guaranteed. You will want to avoid any lender who advertises “guaranteed approval”, because they are most likely not trustworthy at all. The better your credit is the more likely you will be to get approved, but it’s certainly not the only factor that is taken into consideration.

Work on improving your credit

It is highly recommended that you work on improving your credit as much as possible so that you can increase your chances of getting the loan you need. If you have bad credit, it’s incredibly important that you work hard to increase your score as much as possible. There are lots of different ways to go about doing this, so you shouldn’t have any issues as long as you are truly committed. A better credit score will make it even easier for you to get a payday loan, so you will need to keep that in mind. Those with good credit also get lower interest rates, which will save you quite a bit of money.

Final Thoughts

A payday loan can be very helpful when you are facing some sort of emergency expense, but you will need to take your credit into consideration when applying. The more time you take to look at and improve your credit, the more likely you will be to get approved by a reputable lender. A lot of people with less-than-great credit get approved for these loans, but you should never just assume that you are going to get one. Your credit affects your chances of getting a payday loan, though the standards for payday loans are significantly lower than most other kinds.