Learning what happens behind the scenes at a payday lender helps you become a more knowledgeable borrower
. Successful payday lenders have effective policies and procedures in place to get the loans repaid by the borrower. Thousands of people apply for payday loans daily in the United States and other countries around the world. Now, the next time you apply for a payday loan, keep in mind what most pay day lenders are doing with your loan request.
There Are Tighter Job Requirements
Some payday lenders are verifying your time on the job and increasing the minimum from three months to six months or even longer.
Your Banking History Is Considered Important
Some payday lenders are modifying the number of non sufficient funds (NSFs) allowed on a previous checking account statement using an internal guideline that outlines a certain amount of non sufficient fund events within a specified timeframe.
Proactive Loan Decisioning
Payday lenders are getting much better at making decisions up front with all the information they will need sooner rather than later. This helps them avoid trying to chase down their borrowers after they the borrower has defaulted on the loan. For example, lenders may call all references listed on the loan application earlier in the loan process rather than waiting to use them if they can't track the borrower down and the loan is going into default.
Proactive Borrower Communications
Some payday lenders will call you, will email you and may send you a text message before the loan payment is actually due so that you remember to make your payment for the loan on time.
EFT Pre authorization Form
Borrowers that set up recurring payments with their bank have a significantly lower likelihood of becoming delinquent in the first place. Lenders are having borrowers sign an electronic funds transfer (EFT) pre authorization form. This form allows a payday lender to debit your bank account for payment due. Be careful if this is a condition of getting the loan.
More Third Party Information
Some payday lenders are accessing more information about their prospective borrowers through third party companies that offer a service called identification validation. Companies such as TeleTrack, Accurint and Lexus Nexus are competing for this business with payday lenders in order to give them an extra layer of protection from risk of default because identity theft occurred and the applicant who is applying for the payday loan is not actually who they say they are.