If you want to apply for a short term loan, you will need to fill out an application form. At first glance, short term loan applications can often seem complex and long-winded.
Do you ever wonder why you need to provide so much information?
There are reasons why short term loan applications involve so many questions. CashLady explores the topic of short-term loan applications and finds out why they have to be so in-depth.
What do short term loan applications look like?
Short term loan applications usually require similar pieces of information.
However, some lenders will require different things to others. This means although application forms look similar, there are usually some differences.
Short term loan application forms are usually split into different sections:
How much money do you want to borrow?
When you are applying for a short term loan or filling out payday loan applications, you will need to disclose how much money you want to borrow. Also, this is known as your loan amount.
It is important to think carefully about how much money you want to borrow. Give this some serious consideration.
Initially, this amount will be used by the loan provider or providers who are considering your application. This is in order to make a decision on whether to approve your short term loan.
If you ask for too much money, you could be refused the loan because you may not be able to pay it back. If you ask for too little money, it can be difficult to change the amount at a later date once your application has already been carefully considered. This is why it is important to really consider how much you actually need.
Different lenders offer different loan amounts.
For example, Wonga offers loans ranging from £50 to £400.
CashLady (on the other hand) has a panel of regulated short-term loan providers who will usually lend amounts between £80 and £2,000.
Your Personal Details
Next, you will be asked to fill in your personal details.
This section usually includes your title, name, and date of birth. It is important to complete this information correctly, as this is what lenders will use to check you are who you say you are.
Also, you will need to disclose your marital status.
You will almost always be asked for your email address and phone numbers. This is so your lender can contact you about your application. When you complete your application online your lender may call you to verify your identity.
Application forms for loans will often ask you how many dependents you have. Dependents are children or adults who depend on you financially. They are still classed as dependents even if they do not live with you.
Short term loan providers need this information because how many dependents you have can affect how much money they are able to lend you.
In this section, some short term loan providers will ask you why you want to take out the loan. This information is used to help them make their decision about your loan application. It is also used to inform lenders why people are borrowing money from them, so they can provide the best possible customer service.
Furthermore, some lenders, such as The Money Shop, will also ask you if you own a car. This information can help lenders to decide how much you can afford to borrow.
Where you live
All application forms will ask you for your home address and whether you own your home.
This not only helps to verify your identity but gives lenders the information they need to carry out credit and affordability checks.
If you have lived at your address for less than 3 years, you may need to give previous addresses so that lenders can carry out full credit checks.
What do you earn?
Short term loan applications always require you to disclose what you earn and where you earn that money.
This information enables lenders to carry out necessary affordability checks. It will help them decide how much money they are able to let you borrow and it will help to verify your identity.
You will need to disclose who your employer is or declare you are self-employed, unemployed on disability benefits or being paid a pension.
You may need to fill in your next pay date and/or how frequently you are paid. This information will not only help lenders decide how much you can afford to borrow. Yet it is also relevant information for payday loan applications.
As such, if you take out a payday loan in the UK you usually pay back your loan on your next payday.
You may also be asked for your bank account details. Because your loan should go into the same account you are paid into. It also gives lenders the confidence of knowing the money is transferred to a registered UK bank account. The bank will have already performed identification checks.
How much do you spend?
To carry out full affordability checks that will enable lenders to decide how much they are able to lend you, loan providers will ask for information about what you spend.
This will generally include:
- Mortgage/Rent costs
- Utilities/other bills
- Transport costs
- How much you spend on food
- Any credit repayments
- Any other expenses
You may be asked for other information, depending on the lender. For example, The Money Shop asks for your childcare and insurance costs.
Not all loan applications are the same. Different short term loan providers have different lending criteria. This means they may ask for different pieces of information from you.
Most lenders may require a credit check in order to process your application. A credit check will allow your lender to see if you have any current debt and how well you have paid any other loans off in the past.
Your bank details
It is important to complete your bank details correctly as this is where your money will go if you get accepted for a loan.
Some lenders, such as The Money Shop, ask for information about how long you have had your bank account. This can help lenders to make their decision about whether or not to give you a loan.
PaydayExpress also asks for your debit card details. This is because your loan amount will be taken from this card when it is time to pay them back.
Why do I have to disclose whether I have been bankrupt?
Many lenders will not give a loan to anyone who has been declared bankrupt in the last year.
Every short term lender will look at your credit history as an indicator of how much risk you represent and if you are likely to make your loan repayments. Whilst a previous bankruptcy may not be the best barometer of your current financial situation, it will be taken into account.
This is one of the reasons why rebuilding your credit history is so important. A good credit score will help you to obtain finance, especially if the bankruptcy was many years ago.
Why do I need to say whether I am with a debt management company?
Some short term loan providers may not approve your loan application if you are on a debt management plan.
By applying through CashLady, you may have a better chance of being approved for a loan. This is because your loan application will be seen by a panel of lenders, rather than just one.
Debt management is for people who have struggled to manage their finances properly, so anybody on a debt management plan will likely represent a higher level of risk.
Will the information I disclose on my short term loan applications be secure?
By applying for a loan through a reputable lender or payday loan broker, you know your information will be kept secure at all times.
Also, there should be a box you can tick on payday loan application forms to make sure your details are never passed on to any third parties for marketing purposes.
When completing short term loan applications or payday loan applications, it is important to fill in the form as fully and as accurately as possible. You must always tell the truth about your circumstances.
It can seem like you are filling in a lengthy form with a lot of irrelevant information. This is not the case.
Short term loan providers are required by law to make sure you can afford the loan you are applying for. In order to do this, they need to know as much about your finances as possible.
This means when completing application forms, you will need to disclose personal information such as how much you earn and how much you spend.
It can seem as if you are filling out very personal information but it is important to do this so that lenders are able to make informed decisions about your loan application.