The best reason to go to online lenders is their ability to process payday loans quickly. You can access fast money by providing just a few details on a short online application form. Have you ever wondered how it works? It’s all about automation and your Social Insurance Number (SIN).
What is a payday loan?
In Canada, a payday loan is a non-traditional short-term loan of up to $1,500, meant to cover a temporary shortfall. Per Canadian law, payday terms cannot exceed 62 days and are typically due on the borrower’s next payday.
Since it is an unsecured loan (no collateral), it has higher interest rates than traditional personal loans. However, you get the cash within an hour of applying for one, making it very attractive if you need money quickly.
How does it work?
Typically, an online lender will require you to provide personal information, including your full name, birth date, email, physical address, contact number, and SIN. After filling out all the needed information and hitting next, you will get an onscreen message and email telling you if the lender approved the loan within a few minutes. In some cases, the lender may require additional information.
The next step for approved loans is to read the loan agreement. The contract contains the full terms of the loan, including the principal amount, interest, loan fees, and penalties. After signing it and choosing the method of receiving the money, you will get the cash within an hour.
What is the role of automation?
Payday loans have been around since the early 1900s, although they became popular in the US in the 1980s. People could get cash quickly, but they had to provide pay stubs and other documents to prove they could pay it back. In most cases, borrowers issued a check dated for the repayment date.
So how can online lenders approve a loan so fast without documents and help you get access to fast money? Some lenders have automated systems that work 24/7. This refers to automated loan processing software that uses cloud and web technologies. It looks at the information you provide to check if you meet the criteria for a loan. There is no paperwork required.
For example, online lenders usually require borrowers to be 18 and above, so it will scan your birth date to check that out. However, the most critical data point in the application is the SIN because it contains a wealth of employment and other financial details about you. By providing your SIN and agreeing to a lender’s terms, you allow them access to that information. The system can quickly determine if you will be able to pay back the loan within the prescribed period.
Is my information safe?
Providing personal information to licensed online lenders in Canada should be safe. Still, it’s best if you ask about the encryption they use. Check if the site has “HTTPS” in the URL, which means it uses the Secure Socket Layer (SSL) protocol. Some lenders go a step further and use top-level encryption and best practices in digital safety.
Automation Is the Key
Online lenders help people who need to get access to fast money, and this is primarily due to automation. Without automated loan processing software, lenders would require more information, take longer to approve loans, and tack on higher fees to process them.