How to apply online for a short-term loan
If you are a first-time borrower in need of cash to cover costs over a short period of time, understanding the loan application process will give you a peace of mind to apply with confidence.
Before applying for a loan, it is worth shopping around to make sure you are getting the best deal. Every short-term lender will have a unique set of lending criteria and it is possible that you will receive a better offer from one lender than others. You also want to make sure that the lender you plan to apply with is a well-established and trusted lender. Applying with a non-licensed lender, for example, could result in very high interest and costs, in addition to harassing debt collectors contacting you. At Friendly Finance, we aim to help make the search relatively quick and easy for you by keeping our lender information constantly updated and working with the most trusted lenders in the market.
Tips for reviewing lenders
Lending criteria – Every lender will have a set of minimum criteria that need to be met for them to consider lending. The criteria usually include; age, residency, employment and income amount. Make sure you meet the minimum criteria before choosing to apply with a lender.
Look for the fees charged – Short-term lenders should stipulate the average interest rate, initiation fee and monthly service fee that are applied to a loan. The actual fees may vary with loan amount and loan term. Use these fees to gauge if the loan is affordable for you.
Look for a license number – Every lender should be licensed by the National Credit Regulator. A licensed lender will display their NCR number somewhere on the website (typically in the footer). Look out this number and avoid lenders that aren’t licensed.
Look for a secure website – A lender’s application page should be secure in order to protect the personal details you provide during the application process. A secure page will have the prefix ‘https’ rather than ‘http’.
I found a lender, now what?
Submit an application for a loan. The application for a payday loan is relatively standard across all lenders. The first step will be to complete the online application form. Other than loan amount and term most lenders will ask for:
- ID Number
- Home address
- Number of Independents
- Employment status
- Cell and email address
- Bank Details
You will also need to provide your three most recent monthly payslips or bank account statements to prove your income. Depending on the lender, this documentation may be required as part of the initial application, or once you receive pre-approval for a loan. The documents can usually be uploaded on to the lender website making the process simple and efficient.
After you complete the application and click submit, the lender will begin to verify the information. Under the National Credit Regulation, all lenders must verify the information and run a number of checks on you to make an ‘affordability’ decision. The affordability decision essentially determines whether you will be able to repay the loan on time and is required as part of being a responsible lender. Some lenders will also run a credit check on you as part of the lending decision, although short-term lenders are often less concerned with a bad credit score as the loan term is short.
The checks are done almost instantaneously and you should receive an approval decision within a few minutes from the lender.
If you are approved for a loan you will receive a loan agreement to sign.
Tip: The loan agreement will outline the full cost of borrowing, including the potential fees and charges for late payment. You are not obligated to sign the loan agreement and if the fees seem too much, you can still walk away at this point. It is worth reviewing the agreement carefully before signing to make sure you are happy with the total cost of borrowing.
Once you have signed the loan agreement, the lender will outline the date of repayment and the funds will be transferred to the bank account you provided during the application process. The time taken to receive your funds will depend on your banking institution but as a rule of thumb; you can expect to receive the funds the same day or next business day.
If a lender declines your loan application you have the right to understand why. If the response you receive does not outline the reason and you want to know why to contact the lender directly and request the reasons.
Why would I want to know? Understanding the reason for being declined for a loan could help you find credit next time. For example, if your credit score was too low for the lender to make an approval decision, you may opt for a secured (asset-based) loan option next time where credit scores are not taken into account.
Tip: Submitting an application with a lender is usually free. You may then think ‘I’ll just apply with every lender until I am approved’. Although this is possible, it is not recommended. Every time an application is submitting to a lender, they are likely to run a credit check on you. Having multiple credit checks run in a short space of time can negatively impact your credit score, which may affect your chances of being approved for credit in the future.
I have my loan, how do I repay?
Short-term lenders will usually set up a direct debit to automatically take the money from your account on the agreed upon date. This means that you have nothing to do other than make sure you have enough cash in your account to meet the repayment.