Payday Loans, Pay Day Advances, Same Day Cash Loan Online

How safe is applying for a Payday Loan online ?

Thu, September 16th 2010

A payday lender offers a fast and convenient way to borrow small sums online. Borrows need to make sure that, as with any other financial transaction , that they make sure they deal with reputable organisations before they pass any personal information .

What to look out for ?

Company registration and license  – All lenders need to registered at a  state level before they can legally operate a lending business , or post July 1 2010 with ASIC . So look for the license number on the web site .

Trade Association membership- Responsible members will have joined a trade association, and therefore are committed  to   a code of conduct governing how members operate . In Australia the leading associations for micro lenders are The Financiers Association of Australia and National Financial Services Federation

Internet security- Before entering any personal details online make sure that the site is protected by one of the major security systems i.e. Thawte . This governs how information on the site is stored and encrypted

What happens if you default on a Payday Loan ?

Thu, September 16th 2010

A payday lender is no different to any other lender –  they will want to enforce the agreement entered into -  meaning the borrower that defaults on a repayment will be contacted to arrange for repayment to be made in the event of a defaulted payment . This will generally  incur administration  charges being added  to the account balance outstanding. If a customer repeatedly  fails to meet their repayment obligations then the lender will issue a default notice . A default notice is issued pursuant to Section 80 of the Consumer Credit Code   If the customer subsequently  fails to either make a repayment or agree with the  lender a payment plan, then this failure to remedy may result in a default being registered the borrow with credit reference agencies , and or further legal action being taken.

Registration of a default with the credit reference agencies may affect the borrowers ability to obtain credit in the future.  In all instances, communication with the lender is the key, and for those struggling to make repayments, often a repayment plan can be arranged.

First Stop Money joins Financiers Association of Australia ( FAA )

Tue, September 7th 2010

The Financiers Association of Australia is recognised as the industry’s specialist on all matters relating to finance and credit management throughout Australia.

The Lender tells me I Have Bad Credit. How can I check for myself ?

Mon, September 6th 2010

The Lender tells me I Have Bad Credit. How can I check for myself ?

If you have been turned down for a loan because of poor credit -  this may stop you from getting credit elsewhere or result in you being asked to pay higher interest rates . To understand why,  you can obtain your credit file for yourself and see what is damaging your credit score.  Credit agencies keep information on file for the previous seven years, so this information is available for quite some time to be used by lenders looking at an individual’s past credit performance, when making a lending decision.

Payday lenders are no different to any other lender – in that they use credit scoring when making a lending decision.  They will often lend TO INDIVIDUALS WITH A poor credit file, in fact they may be the only lenders prepared to do so.

IMPORTANT POINT – Lenders cannot access your credit file without your permission.

What’s on my credit file?

• Who the lender was
• Date the credit was applied for
• Type of application -  personal or joint application
• How much credit was applied for
• The type of credit applied for

The credit file contains personal information about the individual that is used to identify the individual. This information is cross checked by lenders with information supplied by the applicant .

• Name and address , drives license number , date of birth and employment record
• Current credit accounts
• Overdue or defaulted accounts
• Bankruptcy records
• Court judgements writs or summons
• Public records

How to check your file?

The two main agencies in Australia are VEDA Advantage and  Dun and Bradstreet. Information can be obtained by post or via the agencies website

VEDA ADVANTAGE                                                                         Dun and Bradstreet

Veda Advantage Public Access                                                   Public Access Centre

PO Box 964                                                                                         PO Box 7405

North Sydney , NSW 2059                                                            St Kilda Rd, Vic 3004

www.mycreditfile.com.au                                                           http://dnb.com.au

Both companies offer a free file by post within 10 days . To obtain your file , you must verify your identity by providing : Name, Date of Birth, Drivers License Number , Current and Previous Home Address, Current and Previous Employment , Lat lender you applied to credit for, Contact telephone number , Signature .

What if there are discrepancies on my credit file?

If you see information on your credit file that is not accurate you need to inform the credit provider concerned (lender) to inform them of the discrepancy. Give them fill information to enable then to investigate the matter – which you are, the reference number, date, amount and discrepancy. A file will be marked as disputed until it is resolved.

IMPORTANT POINT   If the lender finds out that the account was incorrectly reported, then they are required to contact the credit reference agencies so that the incorrect information can be erased from your credit file

There are two types of overdue accounts – clearouts and payment defaults. Overdue accounts reported as a default on your credit file will remain on your file for 5 years from the date of listing. Overdue accounts reported as a clearout will remain on your credit file even after the account has been resolved, however the entry will be updated to show that the balance was paid in full, settled , or brought up to date .

LENDERS USE THE INFORMATION ON YOUR CREDIT FILE TO DECIDE WHETHER TO LEND YOU MONEY. THIS INFORMATION IS IMPORTANT TO YOUR FINANCIAL HEALTH. YOU SHOULD MONITOR YOUR CREDIT FILE PERIODICALLY TO ENSURE THAT ALL THE INFORMATION IS FAIR AND ACCURATE AND TO PTOTECT YOUR IDENTIFY FRONM FRAUDULANT ACTIVITY

How quickly can a Payday loan be approved ?

Wed, September 1st 2010

Here is the process form online application  to cash deposit

A payday loan requires the lender to perform the  same checks a high street bank does.

Identification – A lender must ” identify”  the borrower . Acceptable forms of identification in Australia are :

• Passport
• Driving License
• Proof of Age Card
• Key Card Pass

Next the lender will routinely verify the employment status of the applicant. Again this is routine for banks processing a new loan application for a loan or credit card -  and is a confidential call to the applicants stated employer to verify that the applicant works there . In some cases the company may require approval form the employee before they respond to any external enquiries.

Finally -  the lender will perform a credit review of the application to check whether the application can be approved by meeting the lenders credit criteria , and secondly, checking the applicants  income ands expenditure , looking to see that  the loan is affordable , meaning the borrower can afford the repayments .

How long does this take  ?

Payday loan advance applications made online are processed the same day . The process is efficient , largely automated insofar as the communication with the borrower is mainly my email and sms – and designed to enable the majority of the applications to have the cash loans transferred to the applicants bank the same day .

End

Payday Loan – Wikipedia

Mon, August 30th 2010

A payday loan (also called a paycheck advance) is a small, short-termloan  that is intended to cover a borrower’s expenses until his or her next payday

Are Payday Loans expensive ?

Wed, August 18th 2010

An interesting question and one that depends on your perspective.

Traditionally , the cost of a loan is measured or compared with other loans on the basis of the annual percentage rate APR.  The key word here is annual, as the APR works out the cost of a loan over a full 12 months .

Payday loans are by their very nature short term – with the repayment based on their salary cycle . Depending on when an individual gets paid -  the average loan is a little over a month . so looking at the cost as represented as an annual figure makes no sense . People want fast cash -  to solve a particular problem quickly , but on the basis that they will repay it in a short space of time i.e when they get paid .

Example – You would shake your head in disbelief if you walked into the Holiday Inn and asked for the price of a room and had the response – ” Rooms cost $ 73,000 dollars a year  -  how many nights please ? ”

There you have it. The cost of the loan should be considered in light of the time the loan is taken out for, and amongst other factors the risk that the lender is taking i.e. unsecured loans carry a higher risk.  Additionally, micro  lenders are mandated by the industry  regulator ( ASIC ) to carry out the same checks  for a $ 350 loan as a high street bank would for a $ 3000 loan .  This means the administrative and credit referencing costs are materially the same in both instances. Passing these charges on to the customer make the costs and therefore the derived APR seam disproportionately high .

So in summary , anyone who wants fast cash should expect that the higher risk of a small unsecured loan combined with the administrative costs that the lender carries will make the micro  loan seam disproportionately expensive when compared with a larger  loan taken out over a longer period from a high street bank . The APR is not an appropriate comparison tool for the reasons explained earlier.

Typically , someone requiring a Payday loan has exhaused other sources of capital. They  need the funds fast to solve a pressing problem and are expecting to repay the loan in a very short time frame and are prepared to pay for the convenience that these types of loans offer.

TD

Debt management unravelled

Wed, August 4th 2010

Increasingly people face financial difficulties – often caused by uncontrolled debts.  Borrowing more to solve a problem, i.e more  debt, is a short term fix which can work but can create a bigger headache.

First Stop Money  take “responsible lending”  very seriously. All cash loan applications are looked at on their own merits, taking into account when reviewing an online loan application a number of factors that any prudent lender would seek to establish – income, other financial commitments, household expenditure, affordability, ability to repay  to name some .  A payday loan can be looked at as a financial sticking plaster. A short term cash advance works very well to cover unexpected bills, where a short term problem requires a short term solution – fast.

However, we are sometimes approached by online loan applicants who are, to put it simply, in a financial crisis. Their ongoing income in the medium to long term cannot support their current financial commitments after household bills are met, let alone any additional borrowing, These applications we properly and responsibly decline. However for the applicant – the problem remains.

To resolve the  imbalance between income and expenditure there are few simple remedies

• Earn more – not easy to do overnight – but if a wage rise happens – its a long term fix and the least costly or painful. Sometimes taking a second job does the trick
• Spend less – cut out unnecessary expenditure . Review the necessities against the niceties. Entertainment often is a good place to start, then car then holidays.
• Sell something to pay off a debt and reduce  loan repayments  – eBay , old jewellery ( Gold is at an all time high )

Sadly , these are not always possible and so when there seems to be no way out the only option is to look to restructure your financial affairs either formally or informally  – and seek debt management advise

Debt arrangements  comes in a number of flavours.  What is really the best solution, and how can it practically help the debtor?

Informal Agreement v Debt Management v Bankruptcy

An informal agreement is an arrangement where one company manages an individual’s debts by taking one monthly payment from the individual and splitting this amount among the other different creditors.  This may appeal for two reasons: first, the debtor hands over the management of numerous  creditors to a third party ; and second, the debtor may in the short term pay a lower payment than the original loan or debt in the short term , providing the breathing space for the borrower to get back on their feet financially. In the long term a borrower may be able to negotiate through intermediary a smaller repayment to clear the outstanding obligation. However, this is an informal arrangement and at any time any creditor can decide to pursue the debt through other means (court action) as they are not legally bound to continue to accept the payment plan agreed at the outset.

A Debt Management agreement is differs from an informal agreement in so far as it is an agreement ratified by the courts , an arrangement  that the majority of the creditors have signed up to , and once in place,  the borrower is protected by a court order from any creditor taking further action. The downside is that it takes longer to set up, requires a majority of creditors to agree to the petition and consequently the administrative costs are higher.

Finally – Bankruptcy . A bankruptcy order can be triggered by either a creditor or voluntarily by an individual. Under a bankruptcy order – all prior creditors claims cannot be pursued . The financial slate is wiped clean!  However, appealing this is , Bankruptcy has a big downside . A bankrupt will find it very difficult to obtain any finance in the short to medium term , and in today’s world more and more , companies other than lenders –  from utility companies , to Telco’s , use a credit score to vet an application for service  -  a bankrupt may therefore  need to prepay for services , which is ultimately more costly and carries its own financial burden.

From a lenders perspective – if you are finding difficulty meeting your repayments alongside household bills – call your lender – they should be willing to listen and support a program that helps in at least the short term – freezing interest charges, reducing monthly payments. If however this cannot be achieved, and some lenders take a hardline  approach , swiftly instigating legal recovery processes -  then protection is offered by the courts through both debt management and under a bankruptcy order.

TD

Disclaimer – The opinions contained in this blog do not constitute legal advice and should not be relied upon by an individual. Anyone experiencing serious financial difficulty should seek professional advice form an approved debt management company or lawyer.

First Stop Money – Fastest Growing Micro lender in Australia

Mon, August 2nd 2010

Australians are increasingly turning to online micro lenders as a convenient way to obtain short term financial support.  Micro loans, often called Payday Loans are typically under $ 1000 and repaid within 30 days – generally on the borrowers next pay date .

Customers apply for their payday loan online, and complete all the necessary paperwork electronically, passing through application, compliance and underwriting stages in minutes – before being offered a small cash loan which is usually deposited in their bank account on the same day .

Customers must be over 18, have a bank account and  be in employment. Applicants with a poor credit history can accepted subject to affordability.

The industry came under ASIC control from 1^st July 2010

First Stop Money was launched in June 2009 and commenced loan lending in November 2009. Over its first year, its lending activities have grown by over 15% compound each month, offering loans in WA, SA, NT , TAS and VIC.

First Stop Money’s management team have been involved in the payday loan industry for many years prior to forming FSM in both Australia and the UK .